London shares fall

The London Stock Exchange building in central London, pictured on March 7, 2013. London equities closed down despite official data showing that Britain was improving on its economic recovery (AFP/File)

LONDON (AFP) – London equities closed down on Thursday despite official data showing that Britain was improving on its economic recovery.

The FTSE 100 index entered negative territory, ending down 0.49 percent to end at 6,587.95 points.

Britain's economic recovery accelerated in the second quarter but Chancellor of the Exchequer George Osborne insisted that the government would stick to its tough austerity plans.

Gross domestic product (GDP) grew by 0.6 percent in the three months to the end of June, the Office for National Statistics (ONS) said.

This was compared to a gain of 0.3 percent in the previous quarter and is the first time since 2011 that Britain has achieved back-to-back quarterly increases.

In the expansion, all main sectors of the economy-- agriculture, construction, industrial production and services -- grew together for the first time for almost three years.

"Given the boost to the 'feel-good' factor from the recent run of events -- good weather, royal baby etc. -- it looks like the recovery will maintain its momentum into the start of the third quarter at least," said Vicky Redwood, chief UK economist at the Capital Economics research group.

Osborne, who shares his first name with Britain's new prince, welcomed the data, but cautioned there was much work to do.

The chancellor of the exchequer tweeted: "Britain's holding its nerve, we're sticking to our plan, the economy's on the mend. But still a long way to go."

"Figures from the UK gave investors some positive signs that the UK economy is improving. Economic growth accelerated in the second quarter in all main industries for the first time in three years," said Lee Mumford, Financial Sales Trader at Spreadex.

"Gross domestic product increased 0.6 percent, evidence the economy is gradually getting back on its feet," he added.

Shire rallied 5.50 percent to 2339 while Rolls Royce climbed 5.08 percent to 1240.

The company recorded a net loss in the first half of 2013 compared with a profit after tax one year earlier on changes to finance costs, the maker of aircraft engines said.

It posted a loss after tax totalling ??358 million ($550 million, 416 million euros) in the six months to June 30 compared with a net profit of ??1.2 billion in the first half of 2012, Rolls-Royce said in an earnings statement.

However, underlying pre-tax profits surged by a third to ??840 million, while revenues jumped 27 percent to ??7.3 billion for the company whose engines are powering the new Airbus A350 wide-bodied planes.

"While underlying profits were up 34 percent ... it is clear we have a lot more to do on cost," Rolls-Royce chief executive John Rishton said in the statement, adding that the company was maintaining its full-year profit estimates.

News of surging underlying earnings sent Rolls-Royce's share price soaring to the top of the London stock market.

"Rolls Royce is leading the FTSE, up almost 4.0 percent on the back of encouraging first-half results this morning, although some clients are taking the opportunity to sell at these levels," said Andy McLevey, head of dealing at online stockbroker Interactive Investor.

GKN was the biggest faller shedding 4.19 percent to 326.80. It was followed by Fresnillo on demand concerns at 4.12 percent to 1025.

Lloyds Banking Group was the most traded stock, with 86.23 million units changing hands, followed by Vodafone with 42.78 million.

On the currency markets, the pound stood at $1.5325 at 5.10pm, up from $1.5315 at around the same time Wednesday, while it slipped to 1.1587 euros from 1.1601 euros over the same period.