LONDON MARKETS: London Stocks Log Modest May Gain; Pound Swoons

By Carla Mozee, MarketWatch

Vodafone records best month since November

U.K. stocks fell Friday, leaving British blue chips with a weekly loss and just a small advance for May.

The FTSE 100 fell 0.8% to 6,984.43 as only shares of nine companies ended higher. Supermarket shares were among those pushed lower, with Tesco PLC down 1.8%. Among industrials, equipment-rental firm Ashtead Group PLC slid 3.5%, adding to Thursday's 4.6% decline after U.S. peer United Rentals Inc. (URI) said activity in May had been softer than it had expected.

U.K. stocks were rattled with other European stock markets (http://www.marketwatch.com/story/european-stocks-drop-as-greece-worries-persist-but-stocks-looking-at-monthly-win-2015-05-29) as investors waited to see if debt-laden Greece was making any headway on its aim to reach a deal by Sunday with its creditors. Athens is facing a June 5 debt-service repayment to the International Monetary Fund. Read: Greek optimism on deal is misplaced, says German finance minister (http://www.marketwatch.com/story/greek-optimism-on-deal-is-misplaced-says-german-finance-minister-2015-05-29)

The best performance on the FTSE 100 Friday came from Associated British Foods PLC , up 2.6% after Goldman Sachs raised its rating on the company to buy from sell. AB Foods runs the clothing retailer Primark, as well as sugar operations. The roughly 17% underperformance of the shares so far this year "offers an attractive entry opportunity in our view," wrote Goldman analysts in a note.

Vodafone shares rose 0.7%. Some of the largest investors in the mobile-phone services provider are open to a tie-up with U.S. cable company Liberty Global (LBTYA), according to a Reuters report Thursday.

Vodafone shares rallied 10.8% this month, after Liberty's Chairman John Malone reportedly said last week that Vodafone would be a "great fit" for Liberty's operations in Western Europe.

For the month, the FTSE 100 rose 0.3%, the smallest monthly gain since April 2013, according to FactSet data. It closed the holiday-shortened week down by 0.7%.

In M&A news, U.S. data-center operator Equinix (EQIX) said Friday it has reached a deal to acquire (http://www.marketwatch.com/story/equinix-agrees-deal-with-telecity-2015-05-29-24852531) U.K.-based peer Telecity Group PLC valued at 2.35 billion pounds ($3.6 billion). Telecity shares fell 1.1% on the FTSE 250 index.

Sterling: In the currency market, the pound (GBPUSD) fell against the dollar, trading at $1.5262, compared with $1.5313 late Thursday. Sterling stayed lower against the greenback following a report showing the U.S. economy contracted in the first quarter (http://www.marketwatch.com/story/us-gdp-turns-negative-in-first-quarter-again-2015-05-29).

The pound fell roughly 0.6% versus the dollar this month. "The technicals have taken complete control of the pound/dollar throughout May, with the bears seeing the recent close below $1.55 as an opportunity to exploit and price in further declines," Jameel Ahmad, chief market analyst at FXTM, wrote in emailed comments.

The economic outlook for the U.K. is attractive to traders, but the Bank of England is "still at least a year from raising interest rates, especially with their outlook on inflation being so increasingly dovish," he said.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires