Stocks Drop in London, Reverse Earlier Advance; BP, Shell Pace the Decline

U.K. stocks dropped for the first time in three days, led by energy companies, as crude oil traded close to its lowest level in a month.

BP Plc and Royal Dutch Shell Plc both fell more than 0.9 percent. Cairn Energy Plc bucked the weaker trend in oil producers after Vedanta Resources Plc agreed to buy as much as 60 percent of Cairn India Ltd. for as much as $9.6 billion, to gain access to India’s biggest onshore oil field.

The FTSE 100 lost 33.14, or 0.6 percent, to 5,242.30 as of 9:37 a.m. in London. The FTSE All-Share Index declined 0.6 percent and Ireland’s ISEQ Index slipped 0.7 percent.

The FTSE 100 declined 1.1 percent last week after the Federal Reserve said the U.S. economy’s recovery is likely to be “more modest” than forecast and the Bank of England cut its estimate for U.K. growth. The gauge remains 9.3 percent below this year’s high reached on April 15 amid concern that growth in the U.S. and China is slowing and that austerity measures from European governments will hurt the region’s economic recovery.

BP fell 2.2 percent to 407.1 pence. Shell, Europe’s largest oil producer, declined 1 percent to 1,760.5 pence. Crude oil for September delivery traded for $75.45 a barrel, 6 cents higher, in electronic trading on the New York Mercantile Exchange as of 9:07 a.m. London time.

Separately, BP’s relief well and bottom-kill procedures, aimed at permanently plugging its Gulf of Mexico Macondo well, are suspended until the company completes an analysis of complications that might result in a new oil leak.

Cairn, Vedanta

Cairn rallied 3.1 percent to 482.9 pence. London-based Vedanta will pay a total of about $8.5 billion to $9.6 billion in cash, the company said in a statement today. Cairn Energy, Cairn India’s parent, said it will return a portion of the cash raised to shareholders and invest the rest in exploration off Greenland and elsewhere in the world. Vedanta may struggle to fund a 51 percent stake in Cairn Energy India without raising additional capital, according to a report from BofA-Merrill Lynch Global Research today. Vedanta shares climbed 2.8 percent to 2,110 pence.

Cineworld Group Plc climbed 2.5 percent to 208 pence. The U.K.-based cinema operator may increase its interim dividend, the Sunday Times reported, without saying where it got the information.