By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- Bank losses weighed on U.K. stocks fell
Thursday, with the equity benchmark hurt by losses for a couple of
major banks after a ruling by the U.S. Federal Reserve, and losses
for miners led by Fresnillo PLC.
Economic data also weighed on the index after retail sales data
jumped by a bigger-than-expected amount, raising the prospect of a
sooner-than-expected rate hike, which drove the British pound
higher.
The FTSE 100 index gave up 0.6% at 6,569.11, with shares of all
metals producers struggling. Rio Tinto PLC (RIO) fell 1.7%, and
Glencore Xstrata PLC (GLNCY) lost 1.9% after the company said it
will close one of its Australian coal mines this year.
Continued operations at the Ravensworth site are "no longer
financially viable" in part because of lower prices and high
production costs at the mine, according a statement from Glencore
obtained by Dow Jones Newswires.
Silver miner Fresnillo slid over 4%, not helped as prices of the
precious metal fell 6 cents, or 0.3%, to $19.72 an ounce.
For the banking group came news that the U.S. Federal Reserve on
Wednesday rejected the capital plans for the U.S. arm's of HSBC
Holding PLC and Royal Bank of Scotland Group , meaning that
payments to their foreign parents will be restricted to last year's
levels. HSBC shares fell 0.8% and RBS lost 1.5%.
The Fed created risk-assessment tests for financial institutions
after the global financial crisis.
"We have been working closely with our regulators on our first
[Comprehensive Capital Analysis and Review] capital plan
submission. The Fed requires us to improve our process, and we will
do so," said HSBC in a statement Wednesday.
The Fed also nixed Citigroup Inc.'s(C) capital plan, saying the
firm didn't make sufficient progress in improving risk-management
and control practices.
The British pound (GBPUSD) jumped above $1.66 against the U.S.
dollar after sales figures, but retail stocks traded mostly lower
Thursday, with Tesco PLC and J Sainsbury PLC each off 0.6%.
The U.K. government reported that retail sales rose in February,
with sales volumes up 1.7% on the month, and up by 3.7% on a
year-over-basis, surpassing expectations.
The British pound (GBPUSD) jumped above $1.66 against the U.S.
dollar after the data on the view that rates could be rising sooner
than expected. Related retail stocks fell, with Kingfisher PLC and
Burberry Group PLC each down 1%.
A British lobbying group on Thursday said the U.K. economy is
expanding, but the pace of growth in March hit an eight-month low.
The Confederation of British Industry said it expects further
increases in business and consumer confidence as well as recovery
in earnings, although renewed risks in the euro zone may be among
the global developments that pose a risk to U.K. growth.
"And although our direct trade and financial links with the
Ukraine and Russia are relatively small the crisis could have
potential implications for global commodity prices, which may
impact inflation in the U.K," said Anna Leach, head of economic
analysis at CBI, in a statement.
In the utilities group, the U.K.'s regulator overseeing the
electricity and gas markets called for an investigation over
concerns about stalled competition. But shares of British Gas owner
Centrica PLC reversed course and rose 0.3%, but SSE PLC stretched
losses to 2.8%.
The FTSE 100 remained lower after an upward revision in U.S.
fourth-quarter growth, to an annual rate of 2.6% from 2.4%. The
U.S. government data did show that an increase in business
investment was revised lower, stemming from a decline in spending
on structures such as office buildings.
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