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U.K. Stocks Fall for Third Day; BHP Billiton, Lloyds Lead Drop

June 2 (Bloomberg) -- U.K. stocks declined for a third day, led by basic-resource producers and banks, as weaker metals prices curbed the earnings outlook for raw-material companies and investors shunned financial shares.

BHP Billiton Ltd., the world’s biggest mining company, and Anglo American led raw-material shares lower. Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc declined more than 2 percent.

The benchmark FTSE 100 Index fell 11.98, or 0.2 percent, to 5,151.32. The measure slumped 6.6 percent last month amid concern that Europe’s debt crisis will hurt the economic recovery. The FTSE All-Share Index declined 0.2 percent while Ireland’s ISEQ Index climbed 0.3 percent today.

“What we have seen today is continued moves by investors to avert additional risk and this meant that the energy, mining and banking stocks lost more ground,” said Joshua Raymond, a market strategist at City Index Ltd. in London.

Stocks dropped in Asia earlier after Japanese Prime Minister Yukio Hatoyama resigned, less than two months before elections, raising concerns that the world’s second-largest economy will continue to sputter at the same time that China takes steps to cool growth and European nations struggle amid record deficits.

Stocks recovered some losses after home sales in the U.S. topped forecasts. The index of pending home resales rose 6 percent, exceeding the median forecast of economists surveyed by Bloomberg News, following a revised 7.1 percent gain in March, the National Association of Realtors said. The gauge reached the highest level since October.

Ex-Dividend

Associated British Foods Plc, Intertek Group Plc, Marks & Spencer Group Plc, National Grid Plc and Vodafone Group Plc were among companies on the FTSE 100 that traded without the right to dividends today.

BHP Billiton declined 1 percent to 1,856 pence. Anglo America retreated 2.1 percent to 2,591.5 pence. Copper, nickel, and tin fell on the London Metal Exchange.

Royal Bank of Scotland retreated 3.6 percent to 45.14 pence. Lloyds slipped 2.7 percent to 55.89 pence.

GlaxoSmithKline Plc climbed 2 percent to 1,181.5, for a fifth straight day of gains. Jefferies International Ltd. upgraded the shares to “buy” from “hold,” saying Britain’s largest drugmaker is heading toward a “period of more sustainable earnings growth.”

May Gurney Integrated Services Plc advanced 2.3 percent to 207.75 pence after the road- and rail-engineering company reported a 7 percent advance in pretax profit before items as more clients outsourced contracts for services such as waste disposal and road repairs.

Tate & Lyle Plc, the maker of low-calorie sweetener Splenda, rallied 5.3 percent to 450 pence after Royal Bank of Scotland upgraded the shares to “buy” from “hold,” saying it sees “the current valuation as an attractive entry point.”

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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