U.K.’s FTSE 100 Index Retreats; RBS, Rio Tinto Lead Losses

By Alexis Xydias

Aug. 7 (Bloomberg) -- U.K. stocks fell, paring gains for the week. Royal Bank of Scotland Group Plc led declines after posting an unexpected first-half loss and saying impairments will remain “elevated.”

Rio Tinto Group and Kazakhmys Plc dropped as metals prices declined.

Britain’s benchmark FTSE 100 Index lost 53.68, or 1.1 percent, to 4,636.85 as of 12:13 p.m. in London, cutting this week’s advance to 0.6 percent. The FTSE All-Share Index declined 1.2 percent today and Ireland’s ISEQ Index decreased 1.5 percent.

The FTSE 100 has rebounded 32 percent since March 3 amid speculation a global recession is easing and as companies beat analysts’ earnings estimates. Paul Tudor Jones, who runs the $10.8-billion hedge-fund firm Tudor Investment Corp., wrote in a note to investors Aug. 3 that equity markets may pare gains, saying that “impressive counter-trend rallies are a feature, not an oddity, of secular bear markets.”

RBS slid 12 percent to 46.80 pence, headed for the steepest drop since May 13, after gaining in the previous seven sessions. The bank controlled by the U.K. government posted a first-half loss of 1.04 billion pounds ($1.74 billion) as it set aside 7.52 billion pounds to cover bad loans. Analysts had predicted net income of 1.1 billion-pounds, according to the median of six estimates in a Bloomberg survey.

Impairments will remain at “elevated levels,” the Edinburgh-based bank said. Lloyds Banking Group Plc, the U.K. lender that acquired HBOS Plc in January, declined 6.8 percent to 97.58

Rio Tinto

Rio Tinto, the world’s third-largest mining company, retreated 4 percent to 2,395 pence. Kazakhmys, Kazakhstan’s biggest copper producer, lost 2.6 percent to 897 pence.

Copper for delivery in three months slid as much as 1.8 percent to $5,915 a metric ton in London on speculation recent gains have outpaced the recovery in global demand. Nickel, lead, zinc and aluminum prices also declined.

Rolls-Royce Group Plc fell 3 percent to 411.3 pence. The world’s second-biggest maker of aircraft engines was cut to “sell” from “neutral” at Goldman Sachs Group Inc.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.