LONDON MARKETS: U.K. Stocks End With Best Week Since January

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- U.K. stocks slid Friday but ended with the best weekly gain in six months, propelled by indications from the new central bank governor that signaled a pro-stimulus stance.

On Friday, the FTSE 100 index declined 46.15 points, or 0.7%, to 6,375.52. It ended the week up 2.6%, the highest weekly rise since the week of Jan. 4.

U.K. equities failed to follow through from a blockbuster Thursday. The FTSE 100 logged its best one-day advance and percentage gain since fall 2011 on Thursday, surging 3%, or 191.80 points, to 6,421.67 after strong hints from the Bank of England that it will keep its monetary policy accommodative.

Several miners stepped back after posting strong gains on Thursday. Shares of Rio Tinto PLC (RIO) fell 4.4% in London, BHP Billiton PLC (BHP) declined 3.6% and Glencore Xstrata PLC tumbled 6.5%. Shares of Randgold Resources Ltd. fell 5.8% even as Nomura lifted shares to neutral from reduce, as gold prices sank.

Shares of Whitbread PLC fell 2.8% after UBS strategists cut the firm to neutral from buy, after an investment day. "While we view the new brand and international expansion plans positively, we do not think these initiatives change the near-term outlook," said Jarrod Castle, analyst at UBS.

Shares of index heavyweight HSBC Holdings PLC (HBC) rose 0.2%, providing some support for the FTSE.

Goldman Sachs said in a note on Friday that it was advising going long U.K. equities and targeting 7,100 for the blue-chip index. The investment bank gave three reasons for its view: First, the U.K. economy looks to be on an upswing and second, monetary policy looks set to ease further, especially after Thursday's dovish statement from the Bank of England, led by new Governor Mark Carney.

"Third, our forecasts also envisage a gradual stabilization in euro area growth in the second half of the year. As one of the U.K.'s largest trading partners, the gradual improvement in growth here should also be a tailwind for the U.K. economy and U.K. markets," wrote economist Noah Weisberger in a note.

U.K. stocks didn't get a lift from a better-than-expected June jobs growth for the U.S. and upward revisions to data for the two previous months. Analysts said the data will keep the Fed on track for tapering its bond-buying program.

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