By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Downbeat earnings reports from major
U.K. firms such as Unilever PLC and BT Group PLC drove the FTSE 100
index lower on Thursday, offsetting a solid reading on the U.K.'s
second-quarter GDP.
The benchmark lost 0.7% to 6,572.61, after snapping a three-day
losing streak on Wednesday.
Among notable movers in the index, shares of Unilever (UN) (UL)
shaved off 1.3% after the consumer-products firm warned economic
conditions remained difficult throughout its markets.
Shares of BT Group dropped 1.2% after the telecoms firm reported
a 16% decline in first-quarter pretax profit.
Mining firms were also on the decline, tracking most metals
prices lower. Vedanta Resources PLC shaved off 2.7%, Glencore
Xstrata PLC dropped 2.8% and Anglo American PLC lost 2.8%.
Heavyweights Rio Tinto PLC (RIO) and BHP Billiton PLC (BHP) dropped
2.2% and 1.8% respectively.
On Wednesday, several South African mine unions said they were
one step away from embarking on a strike against gold producers
amid wage negotiations.
The losses overshadowed an upbeat reading on U.K. second-quarter
gross domestic product. The Office for National Statistics said the
economy expanded by 0.6% in the past quarter, meeting analysts'
expectations and building on a 0.3% gain from the first three
months of the year. The data showed the four sectors of the economy
-- services, agriculture, industrial production and construction --
all expanded, the first time all have done so in almost three
years.
"The debate will now move on from a misplaced obsession with
so-called double and triple dips, to whether the weakest recovery
on record is finally gathering pace," said Ian Kernohan, economist
at Royal London Asset Management.
"Stronger data from Europe will add to the sense that the U.K.
economy has finally turned a corner, although the new Governor of
the Bank of England will be keen to stress that a rise in interest
rates is still a long way off, in order to allow time for the
recovery to gain traction," he added.
Among gainers in London, shares of Rolls-Royce Holdings PLC
jumped 4.4% after the engine maker said pretax profit climbed 34%
on an underlying basis and backed its prior full-year guidance.
Reed Elsevier PLC gained 3.6% after the publishing firm
increased its interim dividend and said it remains on track to
deliver on its strategic and financial priorities.
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