U.K. stocks were little changed at their highest level in almost a month as a report showed industrial output in the euro area, Britain’s biggest export market, shrank more than forecast.
Randgold Resources Ltd. and Fresnillo Plc each lost at least 2 percent as gold dropped. Trinity Mirror Plc slid 2.3 percent after the police started an investigation into possible phone hacking by former employees of its Sunday Mirror newspaper. WM Morrison Supermarkets Plc climbed the most in 17 months after saying it will reduce capital expenditure.
The FTSE 100 advanced 0.55 points, or less than 0.1 percent, to 6,588.98 at the close in London. The equity benchmark has still declined 3.7 percent from a 13-year high on May 22 amid concern the Federal Reserve will start to reduce its monthly bond purchases this year. The broader FTSE All-Share Index fell less than 0.1 percent today, while Ireland’s ISEQ Index lost 0.5 percent.
“The worse-than-expected industrial-output data shows that a rebound in euro area seems to be weak,” said Jacques Porta, who helps oversee $780 million as a fund manager at Ofi Gestion Privee in Paris. “This is not good news, and investors need to be cautious in the short term. We’re also waiting for the Fed meeting next week. Gradual tapering of stimulus will be a strategy appreciated by investors.”
The Federal Open Market Committee meets on Sept. 17-18 to consider when to start reducing the central bank’s $85 billion monthly bond purchases.
A Eurostat report showed that euro-area industrial production fell 1.5 percent in July from a month earlier. Economists surveyed by Bloomberg had predicted it would drop 0.3 percent. Output from factories, mines and utilities climbed 0.6 percent in June.
Bank of England Governor Mark Carney told lawmakers today that unemployment will take longer to decline than investors anticipate. The central bank’s decision to provide policy guidance has supported the U.K.’s economic recovery, he said.
The BOE said in August that it would leave its key interest rate at a record low of 0.5 percent as long as unemployment remained above 7 percent. The bank forecast that the jobless rate would not fall to that level until 2016.
Randgold lost 2.6 percent to 4,496 pence as gold fell to its lowest price in four weeks. Fresnillo, which mines gold and silver in Mexico, slid 2 percent to 1,194 pence.
Trinity Mirror Plc slipped 2.3 percent to 125.25 pence after the Metropolitan Police began an investigation into whether its MGN Ltd. unit, which owns the Sunday Mirror, is criminally liable for possible phone hacking by its former employees. Trinity denied any wrongdoing in a statement.
Melrose Industries Plc slipped 1.8 percent to 307 pence after Citigroup Inc. downgraded the manufacturer to neutral from buy, saying the shares may not rise further in the near term after a strong rally. Melrose closed yesterday at the highest price since its initial public offering in 2003. The shares have surged 36 percent so far this year.
Morrison advanced 1.8 percent to 302.5 pence, the highest price since March 2012, after saying it will reduce its capital expenditure to about 850 million pounds ($1.3 billion) in its financial year ending in 2015, from an estimated 1.2 billion pounds this fiscal year. The U.K.’s fourth-largest grocery chain said its annual capital expenditure will drop to 650 million pounds from 2015-16.
The volume of shares changing hands in FTSE 100-listed companies was 5.3 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.