By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- U.K. stocks moved mostly lower on
Wednesday, after better-than-expected data for the services sector
triggered speculation that a rate hike could come from the Bank of
England as soon as this year.
The FTSE 100 index fell 0.4% to 6,812.03, setting it on track
for a second straight day in red.
Pulling the index lower, shares of Vodafone Group PLC (VOD) lost
1.4% after the U.K. telecoms regulator Ofcom revealed proposals to
cut what mobile operators can charge consumers to make calls. The
new charge control would apply to all operators and bring down
calling costs to less than half a penny per minute by April
2017.
Barclays PLC (BCS) gave up 2.1% after HSBC cut the bank to
neutral from overweight. The analysts said Barclays's
trading-revenue outlook "is much worse than anticipated".
SABMiller PLC fell 1.1% after Morgan Stanley cut the brewer to
equal weight from overweight following the stock's recent
outperformance, according to Dow Jones Newswires.
Tesco PLC (TSCDF) dropped 1.3% after the supermarkets chain
posted a 3.7% drop in same-store sales, excluding petrol, in the
first quarter.
The London benchmark started the day in negative territory and
nudged a leg lower after a strong reading on the U.K. services
sector sparked speculation that a BOE rate hike could come sooner
than expected. The CIPS/Markit services purchasing managers' index
for May fell to 58.6, down from 58.7 in April, but beat analysts'
forecast of a 58.2 print. Meanwhile, employment growth in the U.K.
services industry strengthened to the fastest rate in 17 years.
Christian Schulz, senior economist at Berenberg, said in a note
that even though U.K. services and construction PMIs have fallen
from recent peaks, the "speed of the economic recovery remains very
impressive."
"Record-low interest rates are no longer necessary, in our
view," he said. "The latest data support our call that the first
hike will come in November 2014."
The BOE has previously signaled that its first rate rise will
come in the spring of 2015.
The pound (GBPUSD) pared losses after the data and traded at
$1.6730, up from as low as $1.6699 ahead of the report.
In other movers in London, shares of Sports Direct International
PLC climbed 1.2% after Exane BNP Paribas added the retailer to its
key-ideas list.
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