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U.K. Stocks Fall as Shell, AstraZeneca Post Profit Drop

Oct. 31 (Bloomberg) -- U.K. stocks fell from their highest level since May as quarterly profit dropped at Royal Dutch Shell Plc and AstraZeneca Plc, while investors speculated the Federal Reserve may slow its pace of bond buying sooner than forecast.

Shell fell 4.9 percent, contributing the most to a decline in the benchmark FTSE 100 Index. AstraZeneca lost 0.6 percent as third-quarter earnings and sales missed analysts’ estimates. Croda International Plc tumbled the most since 2008 after saying that profit will stagnate in the fourth quarter. BG Group Plc rose 2.3 percent after earnings beat analysts’ predictions.

The FTSE 100 slid 46.27 points, or 0.7 percent, to 6,731.43 at the close of trading in London. The gauge still gained 4.2 percent this month as U.S. lawmakers ended a 16-day government shutdown and agreed to extend its borrowing authority until early 2014. The broader FTSE All-Share Index also lost 0.7 percent today, while Ireland’s ISEQ Index jumped 1.2 percent.

“Markets are taking a breather today after reaching highs,” Richard Hunter, head of equities at Hargreaves Lansdown Plc in London, said by phone. “We’ve seen a couple of disappointing earnings today including Shell. The Fed comments were a touch less dovish than in the past, so investors are using the opportunity to take some profits.”

The Fed announced late yesterday that it would maintain its $85 billion in monthly bond purchases until “the outlook for the labor market has improved substantially.” Still, the Fed committee dropped its warning from last month’s meeting that tightening financial conditions could impair a recovery in the world’s largest economy.

Taper Bets

The odds for the Fed to start reducing bond purchases in January rose to 45 percent from 25 percent before the statement, Citigroup Inc. said. Economists surveyed by Bloomberg Oct. 17-18 predicted policymakers would wait until March to begin the cuts.

Shell lost 4.9 percent to 2,076.5 pence, its biggest drop since August 2011. Europe’s biggest oil company said profit excluding one-time items and inventory changes fell 32 percent to $4.5 billion in the third quarter as income from refineries plunged, disruption in Nigeria cut output and spending rose. Analysts had forecast $5.3 billion.

AstraZeneca declined 0.6 percent to 3,309 pence, after earlier falling as much as 2.8 percent. Profit excluding restructuring costs and some items dropped to $2.03 billion, or $1.21 a share, as sales of the Brilinta heart drug failed to offset generic competition for its best-selling medicines. That missed the $1.27 average forecast of analysts in a Bloomberg survey.

Croda slid 7.8 percent to 2,436 pence, its largest drop since December 2008. The world’s second-biggest maker of cosmetics ingredients posted third-quarter profit that missed analysts’ predictions and forecast similar earnings in the next quarter, citing weakening currencies and subdued market conditions.

BG Gains

BG Group advanced 2.3 percent to 1,273.5 pence after the gas producer posted third-quarter earnings excluding disposals and one-time items of $1.07 billion, exceeding the $943 million-average estimate of analysts surveyed by Bloomberg.

BT Group Plc climbed 2 percent to 377 pence, its highest price since August 2001. Britain’s biggest fixed-line company posted second-quarter earnings before interest, taxes, depreciation and amortization and some items of 1.43 billion pounds ($2.29 billion) after adding subscribers to its new sports channels. That beat the average analyst projection of 1.41 billion pounds.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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

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