LONDON MARKETS: Glaxo Shares Fall In London After Earnings Warning

By Dow Jones Business News, 

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- Shares of GlaxoSmithKline PLC dropped sharply Wednesday, keeping a lid on gains for the benchmark FTSE 100 index, after the British drug maker cut its earnings projection.

Glaxo shares (GSK) fell 5%, the steepest decline since October 2008, according to FactSet data, as the company said it now expects core per-share earnings to be similar to 2013. That compares with Glaxo's previous target of 4% to 8% growth.

Glaxo shares led decliners on the FTSE 100 , which edged up 4 points to 6,798.22. The index finished Tuesday's session up 1% at 6,795.34, its highest close in two weeks.

U.K. stocks had nudged slightly higher Wednesday after minutes from the Bank of England's July meeting showed policy makers unanimously voted to hold interest rates unchanged.

All nine members of the bank's Monetary Policy Committee voted to keep the benchmark rate at 0.5% and keep its GBP375 billion-pound ($640 billion) asset-purchase program unchanged. The decision came at a time when policy makers faced criticism for sending mixed signals on the outlook of borrowing costs.

"What was perhaps surprising was that the minutes did not contain any hints from individuals that they were on the brink of voting for tighter policy," said Investec chief economist Phillip Shaw in a note.

Investors have been speculating about when the central bank will make its first rate increase, as the market has recently received a string of solid economic U.K. data. Several economists have projected a rate increase in November.

The pound (GBPUSD) slipped following the minutes, buying $1.7040, compared with $1.7091 ahead of the release.

Elsewhere, shares of BHP Billiton rose 0.4% after the miner posted iron-ore production of 225 million metric tons for the year through June. That was an increase of 20% on the 12 months prior. BHP in April raised its expectations for full-year iron-ore production to 217 million tons.

Other mining stocks gained as well. Glencore PLC was higher by 0.8% and Rio Tinto PLC (RIO) moved up 1.1%.

European stocks

Meanwhile, the Stoxx Europe 600 index rose 0.1% to 342.94.

Session decliners included Deutsche Bank AG (DB), with shares losing 0.6%. According to documents reviewed by The Wall Street Journal, an examination by the Federal Reserve Bank of New York found that Deutsche Bank's U.S. operations suffer from serious problems, including shoddy financial reporting, inadequate auditing and oversight and weak technology systems.

Among national markets, France's CAC 40 index reversed course and rose 0.4% to 4,388.74, and Germany's DAX 30 index gained 0.3% to 9,766.43.

Russia's MICEX index turned lower, by 0.5% to 1,398.88. During afternoon trade, Ukraine's defense ministry said two Ukrainian fighter jets had been shot down in separatist-controlled eastern Ukraine.

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This article appears in: Energy , US Markets , Commodities

Referenced Stocks: 8GC , BBL , BHP , BHP1 , BIL

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