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Most U.K. Stocks Drop; BP Slides After Profit Misses Estimates

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July 26 (Bloomberg) -- Most U.K. stocks retreated as BP Plc reported earnings that missed analysts’ estimates and concern mounted that U.S. lawmakers will fail to increase the federal debt limit.

BP, Europe’s second-largest oil company, dropped 2.6 percent, the most in three months. BG Group Plc, the U.K.’s third-biggest natural gas producer, surged 4.3 percent after saying that profit doubled in the second quarter.

The benchmark FTSE 100 Index gained 4.47, or less than 0.1 percent, to 5,929.73 at the 4:30 p.m. close in London as two stocks fell for each that advanced. The gauge has still dropped 2.7 percent since this year’s high on Feb. 8 as investors speculated that Europe’s sovereign-debt crisis will spread. The broader FTSE All-Share Index also rose less than 0.1 percent today, while Ireland’s ISEQ Index retreated 0.6 percent.

“Markets are becoming increasingly nervous about the possibility of default in the U.S.,” said Michael Hewson, a market analyst at CMC Markets. “Politicians in the U.S. are playing a very dangerous game and investors are nervous because of that. Maybe they don’t really grasp how dangerous their behavior is.”

Democrats and Republicans discussed how to increase the statutory limit on the U.S. national debt overnight. President Barack Obama and the Republican House Speaker John Boehner attacked each other’s proposals in speeches yesterday.

U.K. Growth

In the U.K., the Office for National Statistics reported that the country’s economy barely grew in the second quarter. Gross domestic product rose 0.2 percent from the first quarter, matching the median of 32 forecasts in a Bloomberg News survey.

London-based BP dropped 2.6 percent to 463.25 pence after posting second-quarter profit adjusted for one-time items and changes in inventory of $5.6 billion, compared with the average estimate of $5.9 billion in a Bloomberg survey of 12 analysts.

BG Group jumped 4.3 percent to 1,486.5 pence for the biggest increase on the FTSE 100 after it said second-quarter net income doubled to $1.24 billion. Gas prices rose 58 percent from a year earlier and production climbed 3 percent to 58.9 million barrels of oil equivalent.

Burberry Group Plc, the U.K.’s largest luxury-goods maker, slumped 3.2 percent to 1,549 pence after Royal Bank of Scotland Group Plc cut its rating on the shares to “hold” from “buy.”

Cranswick Plc plunged 15 percent to 629 pence, the biggest drop in three years, after saying first-quarter sales fell and trading in the first quarter was “challenging.” Peel Hunt cut the foodmaker to “hold” from “buy.”

Pace, Anglo American

Pace Plc, the world’s biggest maker of digital television set-top boxes, surged 8.3 percent to 113.7 pence after posting earnings before interest, taxes and amortization in the six months to June 30 of $68.4 million and a 21 percent jump in revenue to $1.19 billion.

Anglo American Plc gained 1.2 percent to 3,061.5 pence as diamond producer De Beers, which is 45 percent owned by Anglo American, reported record sales in its first half.

Pennon Group Plc climbed 2 percent to 725 pence as Liberum Capital Ltd. said it was among companies with the “best total return characteristics” in the U.K. water industry.

Separately, JPMorgan Chase & Co. upgraded Pennon to “overweight” from “neutral.”

To contact the reporter on this story: Conor Sullivan in London at csullivan39@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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