By Carla Mozee, MarketWatch

Utility stocks fall on price-cut concerns

LONDON (MarketWatch)--U.K. stocks fell Friday, as energy shares slid alongside oil prices, while the pound tumbled to a nearly five-year low against the dollar on interest-rate concerns.

Pound: The pound was "in free fall" against the greenback, said Angus Campbell, senior analyst at FxPro. Sterling (GBPUSD) was trading at $1.4745 at the time of the European close, the first time it's traded below $1.48 since June 2010. Late Thursday, it bought $1.4884.

Bank of England Governor Mark Carney (http://www.wsj.com/articles/subdued-inflation-will-delay-rate-rises-says-mark-carney-1426172242?KEYWORDS=mark+carney) "was pretty dovish on the outlook" for monetary policy when he spoke Thursday, said Campbell.

"The outlook from a global perspective, not just the U.K., is looking particularly sketchy," said Campbell. "The inflation outlook is low and poor, the growth outlook isn't all that much better," and with the Federal Reserve set to raise interest rates and a general election set for May in the U.K., "sterling will struggle against the dollar".

Carney said it may take longer than expected for U.K. inflation to rise back to the bank's 2% target, which could contribute to a delay in raising rates. The key rate has been at a record low of 0.5% for six years.

While the pound is being hammered against the dollar, sterling "has appreciated quite significantly against the euro...that's going to cause further deflationary pressure," said Campbell. The eurozone is the U.K.'s largest trading partner. The euro has dropped nearly 8% against the pound this year. The euro (EURGBP) on Friday was buying 71.37 pence compared with around 70.62 pence Thursday.

Stocks: The FTSE 100 logged a 2.5% weekly loss, its biggest since December.

On Friday, the FTSE 100 fell 0.3% to 6,740.58, led by losses in the oil and gas group as crude-oil prices (CLJ5) dropped almost 4% (http://www.marketwatch.com/storyno-meta-for-guid), hit after the International Energy Agency said oil prices remain fragile (http://www.marketwatch.com/story/oil-sinks-after-iea-refers-to-price-stability-as-a-facade-2015-03-13).

"Behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly," the IEA said in its monthly report.

Shares of oil producer BG Group PLC fell 3.1%, Tullow Oil PLC dropped 3.2% and oil major BP PLC (BP) gave up 1.8%.

Meanwhile, some "mining stocks have been marked down, which, as much as anything else, is reflective of the fact that [the market] is a bit more risk-off today," said Richard Hunter, head of U.K. equities at Hargreaves Lansdown.

Shares of iron-ore producer Anglo American PLC fell 2.2%, Glencore PLC lost 2.9% and Rio Tinto PLC gave up 1.7%.

The combination of energy, mining and banking stocks makes up about 40% of the FTSE 100 by value "so inevitably, any weakness in commodity prices, including oil, is a drag on the index," said Hunter. The FTSE 100 recently hit its best closing on record, but has since been largely lackluster as commodity stocks have struggled. The benchmark "last year finished down nearly 3% for similar reasons," he said.

Also Friday, shares of energy provider SSE PLC fell 2%, and British Gas' parent company Centrica PLC lost 1.5%. The losses came as Labour Party leader Ed Miliband is expected to say that if his party wins the May 7 election, he'll push for legislation allowing the energy regulator to force companies to cut prices by up to 10% if it's determined they are too high.

Miliband is slated to outline the plan at a Labour Party event on Saturday in Birmingham, according to reports.

But advancers included Whitbread PLC , with shares up 1.4% after a ratings upgrade at Deutsche Bank to buy from hold for the company behind Costa Coffee and the Premier Inn hotel chain.

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