U.K. Stocks Fall, Led by Energy Producers; Tullow Oil Retreats

By Sarah Jones

March 11 (Bloomberg) -- U.K. stocks fell for the first time in four days, led by energy producers and utilities as Tullow Oil Plc reported a drop in oil and gas production and International Power Plc said lower prices will hurt profitability in 2009.

Tullow Oil lost 3.1 percent, snapping three days of gains, as crude oil fell. Cairn Energy Plc slid 4.2 percent after the company announced a share sale. International Power lost 4.3 percent as the company said it faced a “near term challenge” in the U.K. and the U.S.

The FTSE 100 Index dropped 16.52, or 0.4 percent, to 3,698.71 in London at 9:25 a.m., having gained 4.9 percent yesterday. The FTSE All-Share Index lost 0.4 percent, while Ireland’s ISEQ Index fell 1.6 percent.

“After yesterday’s stellar gains the market will do well just to consolidate,” said London-based trader Paul Chesterton at CMC Markets. “We saw a pull back in the oil price overnight and some weakness in commodity and energy stocks.”

Tullow oil lost 2.3 percent to 794 pence. The company, which today posted a fourfold increase in earnings to 223.2 million pounds ($306 million), said oil and gas production fell 9 percent to 66,600 barrels of oil.

The oil producer this week said it raised $2 billion in loans from 14 banks to fund developments and refinance debt.

BG Group Plc, the U.K.’s third-biggest natural gas producer, fell 1.5 percent to 984 pence as crude oil fell in New York, extending yesterday’s 2.9 percent decline, amid speculation a government report today will show U.S. inventories gained as demand weakened.

Shell Retreats

Royal Dutch Shell Plc, Europe’s largest oil company, declined 1 percent to 1,564 pence.

Cairn Energy dropped 4.2 percent to 1,792 pence as the U.K. oil and gas explorer in India said it plans to place up to 6.5 million shares to help “strengthen” the company’s equity capital base.

International Power declined 4.3 percent to 196.1 pence. The British utility that produces electricity in 20 countries said the company faced challenges from weaker prices in the U.K. and the U.S.

“There is some concern around the outlook in the U.S.,” Nathalie Casali, a London-based analyst at JPMorgan Chase & Co. said in a telephone interview today.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.