By Carla Mozee, MarketWatch

Major oil companies lose ground; U.K. government borrowing increases

U.K. stocks finished in the red on Friday, falling along with a selloff in European stocks as investors braced for the possibility the European Central Bank will soon say commit to winding down stimulus measures for the eurozone economy.

Vodafone PLC was a standout as shares of the mobile telecom company climbed, but major oil companies lost ground ahead of a meeting of the Organization of the Petroleum Exporting Countries.

The FTSE 100 index fell 0.5% to 7,452.91. But the benchmark notched a weekly advance of 1%, the best week performance since the week ended May 26, FactSet data showed.

But U.K. blue chips fell to intraday lows Friday as a selloff in European stocks accelerated. That was prompted by extended gains in the euro, which traded at a more than two-year high against the dollar. The euro began to rally on Thursday as European Central Bank President Mario Draghi spoke about monetary policy.

"The ECB retained the warning that it could boost its asset purchases if necessary, but no one really believes it will," said Brown Brothers Harriman currency strategists in a note.

Investors have used proceeds from sales of bonds to the ECB to purchase other assets, including U.K. equities.

"There was nothing in Draghi's comments that undermine our expectation that at the September meeting, the ECB will announce that it will reduce the assets it buys but extend the purchases through the first part of next year. The first robust expansion in a decade still needs to be nursed to ensure that it absorbs the spare capacity and boost wages and prices," BBH said.

The pound fetched EUR1.1173 on Friday, higher than EUR1.1153 late Thursday in New York. Against the dollar, sterling changed hands at $1.3009, up from $1.2973.

Read:Nobody told the euro that Mario Draghi was dovish (http://www.marketwatch.com/story/nobody-told-the-euro-that-mario-draghi-was-dovish-2017-07-20)

U.K. stocks on Thursday marked their highest close since mid-June (http://www.marketwatch.com/story/ftse-100-lifted-as-unilever-advances-with-ecb-meeting-in-focus-2017-07-20), in part as the pound fell against the dollar. U.K. officials wrapped up round two of Brexit talks on Thursday, with British and EU officials clashing over the U.K.'s bill for exiting (http://www.marketwatch.com/story/uk-eu-clash-over-divorce-bill-as-round-2-of-brexit-talks-wrap-up-2017-07-20) from the bloc.

Stock movers: Vodafone (VOD.LN) picked up 0.5% after the mobile-phone services provider reiterated its earnings outlook for the full year (http://www.marketwatch.com/story/vodafone-revenue-drops-on-forex-effects-2017-07-21).

Among other top advancers in London trade were British American Tobacco PLC (BATS.LN) and apparel and home furnishings seller Next PLC (NXT.LN), with each rising 1.2%.

On the downside, Paddy Power Betfair PLC fell 2.1% and easyJet PLC (EZJ.LN) dropped 1.7%, extending losses logged Thursday after the budget airline's third-quarter update. (http://www.marketwatch.com/story/easyjet-quarterly-unit-revenue-turns-positive-2017-07-20)

Off the benchmark, Paysafe Group PLC (PAYS.LN) leapt 6.8% after the British electronic payments company said Friday it received a possible all-cash buyout offer (http://www.marketwatch.com/story/paysafe-shares-jump-on-38-billion-bid-2017-07-21) from funds managed by Blackstone and CVC Capital Partners. The bid represented an 8.9% premium to Thursday's closing price of GBP5.42 a share.

OPEC ahead: Royal Dutch Shell PLC (RDSB.LN) and BP PLC (BP.LN) were off 1.2% and 0.9%, respectively, as oil prices swung lower.

The oil market will be in focus as OPEC oil ministers are set to gather Monday for a monthly meeting to monitor producer compliance with output quotas. Also Friday, weekly rig-count figures from the U.S. showed a slide by 1 of rigs drilling for crude to a total count of 764 rigs, according to a Baker Hughes report.

Read:How OPEC committee's coming meeting could make or break oil prices (http://www.marketwatch.com/story/how-opec-committees-coming-meeting-could-make-or-break-oil-prices-2017-07-20)

Data:U.K. government borrowing (Public-sector%20borrowing%20to%20cover%20the%20shortfall%20between%20taxes%20and%20spending%20was%20GBP22.8%20billion%20($29.59%20billion)) to cover the shortfall between taxes and spending increased to GBP22.8 billion ($29.59 billion) on the year in the three months through June, as quickening inflation pushed up the cost of servicing the country's debt.

 

(END) Dow Jones Newswires

July 21, 2017 13:10 ET (17:10 GMT)

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