U.K. Stocks Drop as Mining Companies Retreat; Rio Falls

U.K. stocks dropped for a third day, to their lowest level in more than six weeks, as investors awaited U.S. employment data this week to gauge the timing of the Federal Reserve’s tapering of stimulus measures.

Rio Tinto Group slipped 1 percent after the world’s second-largest mining company said it will more than halve capital spending to about $8 billion in 2015. Antofagasta Plc fell 3.4 percent as a gauge of European commodity producers declined. William Hill Plc advanced 1.6 percent as UBS AG recommended buying the bookmaker’s shares.

The FTSE 100 retreated 62.9 points, or 1 percent, to 6,532.43 at the close of trading in London. The equity benchmark slid 1.2 percent in November. It has still rallied 11 percent this year as central banks around the world pledged to keep interest rates low for a prolonged period to support the economic recovery. The FTSE All-Share Index also fell 1 percent today and Ireland’s ISEQ Index retreated 2.1 percent.

“For now, market participants are waiting for new indications regarding the reduction of the Fed’s stimulus, which the upcoming economic data will provide,” said Alessandro Fezzi, a senior market analyst at LGT Bank Schweiz AG in Zurich.

The volume of shares changing hands in FTSE 100-listed companies was 22 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

In the U.S., a report on Friday will give the reading on non-farm payrolls for November, and may show the unemployment rate slipped to 7.2 percent, matching the lowest level in five years. Tomorrow’s private jobs report may show U.S. companies added the most workers since June. The Federal Reserve has said it will monitor labor-market gains before deciding when to pare its $85 billion of monthly bond purchases.

Beige Book

The central bank will provide its Beige Book report on economic conditions in the world’s largest economy tomorrow, two weeks before the Federal Open Market Committee meets on Dec. 17-18 to consider changes to monetary stimulus. Fed policy makers will probably pare the monthly pace of bond buying to $70 billion at their March 18-19 meeting, according to the median of 32 estimates in Bloomberg’s most recent survey of economists conducted on Nov. 8.

The European Central Bank and the Bank of England will both announce policy decisions on Thursday.

Rio Tinto lost 1 percent to 3,200 pence, paring an earlier drop of as much as 2.5 percent. The company will cut capital spending to about $8 billion in 2015, less than half its outlay last year, as it seeks to conserve cash.

“Our capex is reducing, and will come down further,” Sam Walsh, chief executive officer of London-based Rio, said today in a statement. “From where I stand, we continue to see market fragility and volatility.”

Miners Drop

Antofagasta dropped 3.4 percent to 754 pence and Fresnillo Plc fell 2.1 percent to 744 pence. A gauge of mining companies on the Stoxx 600 dropped 1.3 percent. BHP Billiton Ltd. lost 1.1 percent to 1,801.5 pence. Randgold Resources Ltd. slid 3.4 percent to 4,017 pence.

Talvivaara Mining Co. slumped 10 percent to 5.22 pence, snapping its biggest four-day rally, which saw shares more than double, since the company listed in London in May 2007.

William Hill gained 1.6 percent to 387.1 pence. UBS raised the stock to buy from neutral, saying the recent share-price weakness is overdone and provides a good entry point for investors to buy the stock. The bank also said William Hill will benefit from the U.K.’s economic recovery and its online operations will sustain profit growth.

Smith & Nephew Plc advanced 1.9 percent to 828.5 pence, its highest price since at least 1988. Morgan Stanley raised its recommendation on the U.K.’s biggest medical-device maker to overweight, similar to buy, from equal weight, citing the possibility that new orthopedic products can stem its market-share loss.

Betfair Group Plc climbed 4.9 percent to 1,080 pence. First-half pretax profit rose 56 percent to 32.5 million pounds from a year earlier, the company said today. The online gambling operator also increased its dividend by 50 percent to 6 pence.