U.K. stocks fell to a two-month low as investors weighed reports on U.S. retail sales and jobless claims amid concern the Federal Reserve will decide to pare its monthly bond purchases sooner than expected.
Sports Direct International Plc dropped the most in more than two years after posting first-half pretax profit that missed analysts’ estimates. John Wood Group Plc posted the biggest drop since July 2011 as the oil-services company said project delays may reduce its earnings from engineering next year. London Mining Plc lost 9.5 percent after lowering its full-year production forecast.
The FTSE 100 Index slid 62.47 points, or 1 percent, to 6,445.25 at the close in London. The gauge has declined 4.9 percent from an Oct. 30 high as better-than-forecast U.S. economic data fueled concern the Fed will slow its bond-buying - - or quantitative easing -- program sooner than expected. It has still rallied 9.3 percent this year. The broader FTSE All-Share Index and Ireland’s ISEQ Index also fell 1 percent today.
“Investors fear that the end of the party is coming soon,” said Jacques Porta, who helps oversee $780 million as a fund manager at Ofi Gestion Privee in Paris. “Thanks to the good economic U.S. data we’ve seen, investors think that the Fed is going to accelerate the end of the quantitative easing sooner than expected. That’s bad news for the markets.”
A Commerce Department report showed U.S. retail sales climbed 0.7 percent in November, their biggest increase since June. That beat the 0.6 percent gain forecast by economists in a Bloomberg survey. Sales rose a revised 0.6 percent in October.
A Labor Department release at the same time showed initial jobless claims in the world’s biggest economy advanced to 368,000 in the week ended Dec. 7 from a revised 300,000 in the preceding week. The median projection of economists surveyed by Bloomberg had called for 320,000 applications.
The Fed has said it may reduce its $85 billion in monthly bond purchases if the economy improves in line with its forecasts. Some 34 percent of economists surveyed by Bloomberg on Dec. 6 said the Federal Open Market Committee will probably start slowing the pace of purchases at its Dec. 17-18 meeting.
Sports Direct slid 13 percent to 674 pence after saying underlying pretax profit in the 26 weeks through Oct. 27 rose 17 percent from a year earlier to 146.2 million pounds ($239 million). That still missed the 154.5 million-pound average forecast of analysts surveyed by Bloomberg.
“Following the outperformance in the first half, trading has now reverted to management’s original expectations,” Sports Direct said in a statement.
Wood Group plunged 9.9 percent to 718 pence after saying that earnings before interest, taxes and amortization from engineering will probably drop 15 percent next year because of delays to offshore projects and the weak performance of its business servicing oil and gas fields in Canada.
London Mining sank 9.5 percent to 99.8 pence. The company, which operates a mine in Sierra Leone, said full-year iron-ore output will probably not exceed 3.4 million wet metric tons, referring to the ore in its natural state. It had forecast production of 3.6 million to 3.9 million wet metric tons.
United Utilities Group Plc gained 1.7 percent to 655.5 pence. JPMorgan Chase & Co. said in a note that the short-term credit impact of U.K. regulations on utilities will be limited.
Separately, Standard & Poor’s said the companies running Britain’s water, electricity and gas networks will benefit from the changed regulatory framework.
The volume of shares changing hands in FTSE 100-listed companies was 9.3 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.