U.K. stocks declined for a second day as Japan’s gross domestic product expanded less than estimated, while Bank of England Governor Mervyn King said that the euro area’s debt crisis will persist.
Petrofac Ltd. sank 5.2 percent after saying profit will grow at a slower pace in the second half than in the first half. Vedanta Resources Plc slid 2 percent as commodity producers retreated. Whitbread Plc fell 1.9 percent after Deutsche Bank AG cut its recommendation on the shares.
The FTSE 100 Index declined 0.3 percent to 5,831.88 at the close in London. The gauge had risen for the previous two weeks after European Central Bank President Mario Draghi pledged to do everything to protect the euro. The broader FTSE All-Share Index also retreated 0.3 percent, while Ireland’s ISEQ Index slipped 0.6 percent. The number of shares changing hands on the FTSE 100 was 40 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.
“Price action remains firmly subdued with a lack of volumes given that we are at the height of the summer season,” Ishaq Siddiqi, a market strategist at ETX Capital in London, wrote in a note.
King said the U.K. must continue to reform the banking industry and repeated his gloomy assessment that the economy of the single currency zone will continue to struggle.
“If the rest of the world were growing normally, the rebalancing and recovery of our economy would be much easier,” King wrote in an article in the Mail on Sunday newspaper. “But it isn’t. Even the rapidly expanding emerging-market economies are slowing, and the problems of the euro area continue with no obvious end in sight.”
Japan, the world’s third-largest economy, expanded at an annualized 1.4 percent in the three months through June, compared with a revised 5.5 percent expansion in the first quarter, the country’s Cabinet Office said. The median forecast of 24 economists surveyed by Bloomberg News had called for growth of 2.3 percent.
Japan’s GDP reminds “investors of the major difficulties that still beset the global economy,” Chris Beauchamp, a market analyst at IG Index in London, wrote in a note.
Federal Reserve Bank of San Francisco President John Williams said the central bank should ease policy further, according to an interview in the San Francisco Chronicle.
Petrofac, an oil and gas engineer focusing on the Middle East, slumped 5.2 percent to 1,486 pence. The company said that profit will grow at a slower pace in the second half of this year because of delays to projects in Iraq and Saudi Arabia.
Vedanta, a copper producer, slid 2 percent to 977 pence as metal prices declined in London. Lonmin Plc, the world’s third-largest platinum producer, slipped 1.6 percent to 741 pence. Kazakhmys Plc, the biggest copper producer in Kazakhstan, retreated 1 percent to 738.5 pence.
Whitbread, the owner of Premier Inn budget hotels, lost 1.9 percent to 2,110 pence. Deutsche Bank analysts cut the shares to hold from buy.
Elan Corp. advanced 4.4 percent to 9.45 euros. The company, whose experimental treatment for Alzheimer’s disease failed in late-stage clinical tests, said it plans to spin off its drug-discovery unit and won’t discourage takeover offers.
TUI Travel Plc climbed 3.2 percent to 204.9 pence. TUI AG may make an offer for the Central European tourism operations of its TUI Travel unit as the owner of Europe’s largest tour operator seeks to more closely integrate the two companies without making a full takeover, according to two people familiar with the talks.
Michael Page International Plc lost 2.1 percent to 371.2 pence. The staffing company’s Chief Executive Officer Steve Ingham said “we anticipate a challenging second half.”
Mitie Group Plc dropped 4.1 percent to 274 pence after Liberum Capital Ltd. said the stock trades at a significant premium to other companies in its industry.