U.K. Stocks Retreat, Extending Weekly Drop as Banks Fall

U.K. stocks declined, posting their biggest weekly drop in almost a month, as banks and technology companies fell amid investor concern on earnings and valuations.

Royal Bank of Scotland Group Plc and Barclays Plc slid as JPMorgan (JPM) Chase & Co. posted worse-than-forecast first-quarter profit. ARM Holdings Plc, which designs chips for Apple Inc.’s iPhone and iPad, dropped 4.5 percent. International Consolidated Airlines Group SA fell 5.3 percent after Heathrow Airport Holdings Ltd. said it handled fewer passengers in March. Taylor Wimpey Plc, Persimmon Plc and Barratt Developments Plc each lost at least 2 percent as U.K. construction data missed estimates.

The FTSE 100 Index (UKX) retreated 80.27 points, or 1.2 percent, to 6,561.7 at the close of trading in London. The benchmark gauge extended its weekly drop to 2 percent amid a selloff in technology companies on investor concern that valuations are too high. The FTSE All-Share Index lost 1.2 percent today, while Ireland’s ISEQ Index slipped 1.7 percent.

“After the selloff on Wall Street and Asia, there is worry about certain stocks,” Gerard Lane, a strategist at Shore Capital Group Ltd. in Liverpool, England, said by phone. “The selloff has so far been concentrated in mostly highly valued growth stocks and if you’re a value investor it can be pleasing to see some rationality come into these markets. The market is overvalued, so it’s difficult to be gung-ho bullish.”

The FTSE 100 trades at 13.4 times the projected earnings of its members, compared with the five-year average multiple of 11.6, data compiled by Bloomberg show.

The MSCI Asia Pacific Index slid today, as Japan’s Topix Index was led lower by mobile-phone operator and Internet-company investor SoftBank Corp.

Technology Selloff

A gauge of technology stocks posted the worst performance of the 19 industry groups in the Stoxx Europe 600 Index today, extending its loss this week to 4.1 percent.

RBS dropped 0.9 percent 306 pence and Barclays fell 1.5 percent to 236.1 pence. JPMorgan, the biggest U.S. bank, said first-quarter profit decreased 19 percent on lower revenue from fixed-income trading and mortgages.

ARM retreated 4.5 percent to 958.5 pence. Pace Plc, which develops digital receivers, tumbled 7.1 percent to 404.7 pence.

IAG declined 5.3 percent to 392.1 pence. Heathrow, the home base of IAG-owned British Airways, handled 5.8 million passengers in March, a 2.8 percent decline from a year earlier, according to a statement. The number of passengers per aircraft dropped 3 percent in the month.

Builders Drop

Builders fell as the Office for National Statistics said that U.K. construction output in February declined 2.8 percent from January, when it rose a revised 2.1 percent. The median estimate in a Bloomberg survey was for a drop of 1.3 percent.

Taylor Wimpey retreated 2.1 percent to 110.9 pence. Persimmon lost 2 percent to 1,315 pence. Barratt Developments slipped 2.3 percent to 386.3 pence.

BTG Plc retreated 3.1 percent to 520 pence, following a selloff in biotechnology shares. A gauge of health-care companies was among the worst performers on the Stoxx 600.

XP Power Ltd. added 6.5 percent to 1,624 pence. The manufacturer of power control components will pay a dividend for the first quarter of 12 pence a share, up 9 percent from a year earlier. The company also reported a 7 percent increase in revenue and reiterated its forecast for sales growth in 2014.

To contact the reporter on this story: Trista Kelley in London at tkelley2@bloomberg.net

To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Alan Soughley, Srinivasan Sivabalan

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