U.K. stocks fell as investors speculated that a 15 percent rally for the FTSE 100 Index since July may have outpaced prospects for economic growth.
Autonomy Corp., Invensys Plc and WPP Plc paced declining shares, falling more than 2 percent. Weir Group Plc lost 3.1 percent as Royal Bank of Scotland Group Plc downgraded the shares. Antofagasta Plc and Kazakhmys Plc paced a rally in mining companies, limiting losses on the benchmark index.
The FTSE 100 dropped 24.28, or 0.4 percent, to 5,551.91 at the close in London as all but 25 stocks fell. The gauge has rebounded 16 percent from this year’s low on July 1 as concern eased that Europe’s sovereign-debt crisis would cause another recession. The FTSE All-Share Index lost 0.5 percent today, while Ireland’s ISEQ Index dropped 1.5 percent.
Stocks paced European equities lower after the Federal Reserve yesterday said it’s willing to ease monetary policy further to spur the economy and support prices.
“Equities in Europe have had a great run in recent weeks,” said London-based David Buik, a market strategist at BGC Partners. “So a little setback after the Fed’s rather qualified comments on economic recovery can come as no surprise.”
The Bank of England in its Sept. 9 meeting minutes also signaled it is moving closer to adding more stimulus to bolster growth. Policy makers overruled Andrew Sentance’s call for an interest-rate increase for a fourth month in September.
The Monetary Policy Committee, led by Governor Mervyn King, voted 8-1 to keep the benchmark interest rate at 0.5 percent and the bond-purchase plan at 200 billion pounds ($313 billion).
The Confederation of British Industry today said the U.K. economy will grow slower than forecast next year at 2 percent as a public spending squeeze takes hold. That compares to a previous forecast of 2.5 percent.
Shares of Autonomy, the U.K.’s second-biggest software company, dropped 3.3 percent to 1,768 pence. Invensys, a maker of factory controls, declined 3.3 percent to 281.7 pence and WPP, the world’s largest advertising company, lost 2.7 percent to 709.5 pence.
Weir Group lost 3.1 percent to 1,395 pence, falling for the first time in six days. RBS lowered its recommendation for the world’s biggest maker of pumps for the mining industry to “hold” from “buy,” citing the stocks’ valuation.
“We remain firm fans of Weir and believe in the long-term growth opportunities,” wrote London based Andrew Douglas in a report to clients today. “ But we prefer to buy on weakness in the short term.”
Asos Plc, the U.K.’s second-biggest online clothing retailer, retreated 3.2 percent to 1,067 pence as Morgan Stanley lowered its recommendation for the online retailer to “underperform” from “outperform,” citing a 127 percent increase in the share price since the start of the year.
Antofagasta led a rally in mining shares as a weak dollar boosted metal prices. The owner of copper mines in Chile rallied 3.1 percent to 1,214 pence, while Xstrata Plc gained 2.7 percent to 1,198.5 pence and Kazakhmys Plc increased 2.9 percent to 1,441 pence.
Copper gained for the first time in three days as the dollar slid to an almost five-month low against the euro after the Fed yesterday left its benchmark interest-rate target at a record low. Gold futures also advanced, climbing to a record $1,298 an ounce.
Imperial Tobacco Group Plc also climbed after the maker of Gitanes and Gauloises Blondes cigarettes said it expects net revenue from tobacco to rise this fiscal year. The shares rose 1.7 percent to 1,925 pence.
Shanks Group Plc rallied 6.5 percent to 110.2 pence amid speculation Carlyle Group, the world’s second- largest private equity firm, may make a bid for the U.K. waste-disposal company. The firm’s spokeswoman, Emma Thorpe, today declined to comment on the speculation.