U.K. Stocks Drop, Led by Commodity Producers; BP, Shell Retreat

By Adam Haigh

Dec. 19 (Bloomberg) -- U.K. stocks fell for the first time in four days, led by commodity producers, as crude headed for the second-biggest weekly decline in more than five years and a slide in metal prices dragged mining shares lower.

BP Plc and Royal Dutch Shell Plc, Europe’s two largest oil companies, decreased more than 3 percent. Anglo American Plc and Rio Tinto Group dropped more than 3 percent as copper fell below its daily limit in Shanghai after a rise in global inventories indicated demand is weakening.

“Commodity prices will go lower,” said Christian Blaabjerg, a market strategist at Saxo Bank A/S in Copenhagen. “We see demand destruction due to a contraction in the economy,” in China, he told Bloomberg Television.

The benchmark FTSE 100 Index lost 75.42, or 1.7 percent, to 4,255.24 at 11:14 a.m. in London, paring this week’s advance to 0.6 percent. The FTSE All-Share Index declined 1.7 percent today and Ireland’s ISEQ Index fell 1.4 percent.

The FTSE 100 has slumped 33 percent this year as more than $1 trillion in global losses and writedowns at financial firms froze credit markets and sent the U.S., Europe and Japan into the first simultaneous recessions since World War II.

BP, Europe’s second largest oil producer, slid 4.6 percent to 500.5 pence. Shell, the region’s biggest, lost 3.3 percent to 1,752 pence. The stocks account for more than 15 percent of the FTSE 100 index by market weighting.

Oil has dropped 33 percent this month even as OPEC agreed to its largest production cut in more than a decade because traders speculated that falling demand would outweigh the reduction. Crude slid more than $1 after the close of the U.K. equity market yesterday and remained lower this morning.

Copper Retreats

Anglo American lost 7.1 percent to 1,479 pence. The fourth biggest diversified mining company was downgraded to “neutral” at UBS AG and given a “short-term sell” recommendation. Rio Tinto, the world’s third-largest mining company, fell 3.3 percent to 1,478 pence.

Copper for March delivery fell 4 percent from the previous settlement price at the Shanghai market’s open, the lowest intra- day price since December 2003.

Anglo Irish Bank Corp. Plc lost 3.1 percent to 31 cents. The lender said Chairman Sean Fitzpatrick resigned from the company with immediate effect. Donal O’Connor was appointed to succeed him. The stock has slumped almost 98 percent this year.

SkyePharma Plc slid 4.6 percent to 134 pence. The maker of the Flutiform asthma inhaler expects writedowns and charges of as much as 8 million pounds ($12 million) in 2008 after talks to win approval of the Certihaler asthma drug in the U.S. failed.

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