By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Most U.K. stocks fell on Thursday, with
oil firms and drug makers leading the decline, after rate-hike
signals from U.S. Fed Chairwoman Janet Yellen rattled financial
markets globally.
The FTSE 100 index fell 0.5% to close at 6,542.44, less than 20
points shy of its lowest closing level in six weeks.
The benchmark, however, came off session lows, with U.S. stocks
recovering some ground lost in Wednesday's session, aided by a
better-than-expected manufacturing-index reading for the
Philadelphia area.
The London benchmark opened in negative territory after Yellen
late Wednesday indicated a rate hike could come as soon as the
spring of 2015. Speaking after the central bank's latest policy
announcement, Yellen said the Fed may increase rates about six
months after the asset-purchase tapering is done. The taper of the
Fed's bond purchases is expected to end in October or November,
putting the potential first rate hike on course for April or May of
2015.
The comments sent the greenback higher (DXY), which in turn
added pressure on dollar-denominated commodities such as oil.
Energy firms in London felt the pinch, with shares of BG Group PLC
down 0.5%, BP PLC (BP) off 1.8% and Royal Dutch Shell PLC (RDSB)
0.6% lower.
Betting firms took a beating in London as well, extending
declines from Wednesday when the U.K. government said it would
raise taxes on betting terminals. Shares of William Hill PLC
dropped 1.4%, while Ladbrokes PLC slid 4.5% outside the main
benchmark.
The budget also impacted insurance firms as it included plans to
scrap a rule that requires pension funds to be used to buy
annuities. Resolution Ltd. said on Thursday that the impact of the
proposal will be "far-reaching and the implications will take time
to be fully understood." Resolution shares lost 5%, building on a
4.6% drop from Wednesday.
GlaxoSmithKline PLC (GSK) fell 1.6% in Thursday's action after
the drug maker said its cancer drug MAGE-A3 suffered a setback and
didn't meet its primary goal in a trial.
Another drug maker, AstraZeneca PLC (AZN) gave up 0.9%.
Outside the main index, shares of Mulberry Group PLC advanced
5.3% after the luxury-goods firm said Chief Executive Bruno Guillon
will leave the helm with immediate effect. The resignation comes
after the company issued a profit warning earlier this year.
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