U.K. Stocks Fall, Led by Shell, Energy Stocks; EasyJet Drops

By Adam Haigh

July 24 (Bloomberg) -- U.K. stocks fell, led by energy shares, as oil traded near a seven-week low and metal prices retreated.

Royal Dutch Shell Plc and BP Plc, which account for more than 10 percent of the benchmark FTSE 100 Index, led the drop. BG Group Plc slid on speculation investors were reducing holdings in the company to benefit from recent share price gains. EasyJet Plc declined after Europe's second-biggest discount airline said fiscal-year pretax profit will fall as much as 46 percent because of higher fuel expenses.

The FTSE 100 dropped 36.7, or 0.7 percent, to 5,413.2 at 12:48 p.m. in London. The FTSE All-Share Index lost 0.7 percent and Ireland's ISEQ Index fell 1.8 percent.

``People are closing out their long oil and commodities trades to lock in profits,'' said Gregor Smith, a London-based fund manager at Daiwa Asset Management who helps manage $1 billion. ``They are getting incredibly nervous and just want to lock in gains as the oil price drops.''

Shell, Europe's biggest oil company, slid 0.8 percent to 1,827 pence. BP, the second largest, eased 1.1 percent to 516 pence and

Yesterday, oil dropped $3.98, or 3.1 percent, to settle at $124.44 a barrel, the lowest close since June 4.

BHP Billiton Ltd., the world's largest mining company, lost 1 percent to 1,599 pence. Rio Tinto Group, the third biggest, slid 1 percent to 5,047 pence. Copper, lead, tin and nickel fell in London.

BG Group, the U.K.'s third-largest oil and gas producer, slipped 4.7 percent to 1,086 pence despite saying earnings surged 59 percent to a record in the second quarter. BG shares had risen 8.6 percent from a four-month low on July 16 before today.

EasyJet Falls

``Profit-taking is possible despite the record numbers'' as oil prices slip from recent highs, said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh.

EasyJet lost 8.7 percent, to 338 pence. Pretax earnings for the year through Sept. 30 will be 110 million pounds ($220 million) to 120 million pounds, the company said. Record oil prices will add 185 million pounds in additional costs during the year, the airline said.

British Airways Plc, Europe's third-largest airline, slid 6.3 percent to 246.75 pence.

Scottish & Southern Energy Plc tumbled 6 percent to 1,359 pence, the lowest since 2000, after the U.K.'s second-biggest energy supplier forecast a ``modest'' increase in full year profit.

The following stocks also rose or fell in the U.K. market. Stock symbols are in parentheses.

ARM Holdings Plc (ARM LN), which designs semiconductors for Intel Corp., fell 5.25 pence, or 5.5 percent, to 90.25 pence after saying pretax profit dropped 6 percent to 21.2 million pounds.

Panmure Gordon & Co. cut its recommendation for the company to ``sell'' from ``hold'' and slashed its price estimate 30 percent.

Kingfisher Plc (KGF LN), the U.K.'s largest home-improvement retailer, surged 9.2 pence, or 7.9 percent, to 125.9. Sales at its B&Q unit rose in the last 10 weeks as improved U.K. weather conditions encouraged Britons to buy garden furniture and barbecues.

London Stock Exchange Group Plc (LSE LN) added 48 pence, or 5.8 percent, to 872.5 pence. Morgan Stanley upgraded the shares to ``equal-weight'' from ``underweight'' citing the recent share price declines. The stock has fallen 55 percent from the start of the year.

Rolls-Royce Group Plc (RR/ LN), the world's second-biggest maker of aircraft engines, gained 6.25 pence, or 1.7 percent, to 375. First-half profit earnings increased as it sold more propulsion systems and won maintenance contracts.

Yell Group Plc (YELL LN) climbed 9 pence, or 13 percent, to 80. The publisher of Britain's Yellow Pages phone directory reported a higher fiscal first-quarter profit helped by its expanding Internet business and higher sales.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net