U.K. equities fell Friday, with a downgrade for HSBC Holdings PLC and a downbeat update from Tullow Oil PLC hurting their shares, while the crisis in Ukraine served as another source of worry for investors.
The FTSE 100 index shed 0.3% to 6,686.82, and Tullow Oil PLC logged the sharpest decline as its shares dropped 2.6%. The oil and gas exploration company said it will abandon an exploration well off the coast of Mauritania because of a lack of discovery of hydrocarbons.
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Shares of HSBC (HSBC) were also among the worst performers in London, losing 1.5% after a rating downgrade to underweight from equal-weight at Morgan Stanley. The analysts said they see earnings and revenue to be about 15% and 4% below the consensus projections, respectively. Further risks to earnings would stem in part from the issuance of Tier 1 bonds. "However, we are more constructive on cost discipline and asset quality," said Morgan Stanley analysts in a report.
U.K. stocks fell alongside other European benchmarks after the U.S. stepped up its warning to Russia about the Ukraine crisis. U.S. Secretary of State John Kerry late Thursday accused Russia of violating its commitment to ease tensions in eastern Ukraine.
"If Russia continues in this direction, it will not just be a grave mistake, it will be an expensive one," Kerry said, citing growing outflow of capital from Russia in recent months. "It's a preview of how the free world will respond."
Elsewhere, the British pound (GBPUSD) moved higher against the U.S. dollar after U.K. retail sales rose 0.1% in March from February, above expectations of a 0.5% decline, according to FactSet estimates. Sterling traded at $1.6817, up from $1.679 ahead of the data, and higher than $1.6801 late Thursday.
The Office for National Statistics also said retail sales rose 4.2% compared with March last year, with non-food stores seeing the strongest year-on-year advance since April 2002.
The FTSE 100 but remained on track for a 1% rise for the holiday-shortened week.