U.K. stocks dropped for a second day after Federal Reserve Chair Janet Yellen indicated that interest rates will rise six months after the central bank’s monthly bond purchases come to an end.
GlaxoSmithKline Plc (GSK) lost 2 percent for the biggest drag on the FTSE 100 (UKX) Index after a cancer treatment failed to meet two goals in a late-stage trial. Babcock International Group Plc retreated 1.4 percent as Citigroup Inc. lowered its rating on the stock. Next Plc added 1.4 percent after the clothing retailer reported annual profit that beat analysts’ estimates.
The FTSE 100 slipped 51.52 points, or 0.8 percent, to 6,521.61 at 9:49 a.m. in London. The benchmark has dropped 5 percent from its 14-year high on Feb. 24, taking its decline so far this year to 3.4 percent. The FTSE All-Share Index also slid 0.8 percent today, while Ireland’s ISEQ Index fell 0.7 percent.
Yellen sought to clarify how long the central bank will wait before increasing interest rates. Asked to specify what the Fed meant by leaving rates near a record low for a “considerable time”, Yellen said, “This is the kind of term it’s hard to define, but, you know, it probably means something on the order of around six months or that type of thing.”
Fed officials predicted that their benchmark rate will rise to 1 percent at the end of 2015 and 2.25 percent a year later, higher than previously forecast. The central bank left the rate at 0.25 percent, where it has rested since December 2008, and said it will reduce its monthly bond purchases by $10 billion to $55 billion.
To contact the editors responsible for this story: Cecile Vannucci at firstname.lastname@example.org Will Hadfield