U.K. Stocks Retreat as Mining Companies Fall; ITV Shares Drop

U.K. stocks declined for the second time in three days as mining and energy companies declined with commodities and ITV Plc forecast that its advertising revenue growth will slow.

Kazakhmys Plc and BG Group fell more than 2 percent as copper and crude oil tumbled. ITV sank 5.3 percent after the U.K.’s biggest terrestrial broadcaster also warned it may underperform the market as clients cut spending. Marks & Spencer Group Plc paced advancing shares after a double upgrade at JPMorgan Chase & Co.

The benchmark FTSE 100 Index dropped 42.89, or 0.7 percent, to 5,976 at the 4:30 p.m. close in London as 10 companies including BP Plc traded without the right to their latest dividends. The FTSE All-Share Index lost 0.7 percent, while Ireland’s ISEQ Index climbed 0.7 percent.

“Risk assets were sold across the board today after initially putting in some decent gains,” said Angus Campbell, head of sales at Capital Spreads in London. “A move back in the dollar caused commodity markets to weaken.”

The FTSE 100 last week tumbled by the most since March after a slump in commodities dragged energy and mining stocks lower. The gauge yesterday jumped 1.3 percent as companies from InterContinental Hotels Group Plc to Imperial Tobacco Group Plc posted higher earnings.

‘Uncomfortably High’ Inflation

Bank of England Governor Mervyn King said today that inflation remains “uncomfortably high” as officials raised their forecast for consumer prices and cut their prediction for economic growth.

The pound rose after the bank published its report, which showed a short-term inflation outlook “markedly higher” than the previous prediction in February. The central bank kept its benchmark interest rate at a record low of 0.5 percent last week, choosing to support the economic recovery rather than fighting inflation.

Kazakhmys slid 2.8 percent to 1,265 pence, Xstrata Plc, the world’s fourth-largest copper producer, slid 2.2 percent to 1,410 pence while Antofagasta lost 2.5 percent to 1,189 pence.

Copper declined after figures showed inflation in China stayed above the government’s target, raising concern that further monetary tightening may curb demand for the metal. The dollar gained for the first time in three days against a six-currency basket, curbing the investment appeal of metals.

BG Group slid 3.2 percent to 1,367 pence and Tullow Oil Plc lost 1,348 pence. Crude dropped more than 3 percent in New York after an Energy Department report showed that U.S. supplies rose to the highest level in two years.

ITV Falls

ITV retreated 5.3 percent to 72.9 pence after the company said advertising sales will rise 1 percent to 2 percent in the first half. That compared with an increase of 18 percent a year earlier when marketing budgets rose for the soccer World Cup.

Marks & Spencer gained 0.8 percent to 399.2 pence after JPMorgan raised its recommendation for the U.K.’s largest clothing retailer to “overweight” from “underweight,” saying that the company’s “pricing power triggers a re-rating.” Analysts raised their price estimate for the shares to 460 pence from 310 pence.

Centrica Plc climbed 1 percent to 311.7 pence as investors speculated that Qatar may make a takeover offer for the company.

“I am hearing a vague rumor of a bid for Centrica from Qatar, but am treating it with caution,” said Manoj Ladwa, a London-based senior trader at ETX Capital. “I feel any suitors will wait for the price to settle before showing their hand.”

Centrica, Burberry

Julian Mears, a spokesman for the Windsor, England-based company, declined to comment when contacted by Bloomberg News.

Burberry Group Plc, the U.K.’s largest luxury retailer, advanced 2.7 percent to 1,365 pence after French rival Hermes International SCA reported first-quarter sales that beat analysts’ estimates as wealthy consumers purchased more luxury watches and fragrances.

Reed Elsevier Plc climbed 1.8 percent to 559.5 pence after Nomura Holdings Inc. reiterated its “buy” recommendation for the shares, saying that the company’s risk solutions business is undervalued.

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