By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- U.K. stocks were mostly lower on Wednesday, as better-than-expected unemployment data fueled speculation the Bank of England will need to hike rates sooner than laid out in its guidance.
The FTSE 100 index slipped 0.1% to 6,576.72, after closing at the highest level since August 14 on Tuesday.
Investors in London digested the latest labor data from the Office for National Statistics, showing that the unemployment rate fell to 7.7% in the period from May to July, down from a level of 7.8% in the months from February to April. Additionally, total pay rose 1.1% compared with the three-month period a year earlier.
The level of joblessness has been a major point of attention recently, after Bank of England Governor Mark Carney said the central bank will consider raising interest rates when unemployment drops below 7%.
"The upturn in the labor market bodes well for the sustainability of the wider recovery, as more people in employment and rising wages should help boost economic growth further," said Chris Williamson, chief economist at Markit, in a note.
"The improvement also increases the possibility that unemployment could fall faster than the Bank of England expects, meaning an earlier hike in interest rates than 2016, as currently envisaged under the Bank's 'forward guidance,'" he added.
Among notable movers in London, shares of HSBC Holdings PLC (HBC) dropped 1.1% after J.P. Morgan Cazenove cut the banking major to neutral from overweight in a move to limit exposure to emerging markets. Instead, the analysts said they prefer domestic U.K. banks.
"With an improving economic outlook for the U.K. (...) and substantial progress on capital made by domestic U.K. banks in 2013, we believe that the relative attractions of the domestic U.K. banks sector have improved compared to HSBC and StanChart, which face headwinds within some EM economies," they said.
Shares of Standard Chartered PLC fell 0.5%.
Kingfisher PLC gave up 0.9% after the home-improvement retailer reported a 0.8% drop in first-half like-for-like sales.
On a more up beat note, shares of ARM Holdings PLC (ARMHY) rallied 4.7% after Deutsche Bank said the chip maker will benefit from the launch of Apple Inc.'s (AAPL) iPhone 5S.
Some mining firms were also higher as metals prices rose across the board. Shares of Glencore Xstrata PLC (GLCNF) added 1.4% and Rio Tinto PLC (RIO) picked up 0.8%.
-Sara Sjolin; 415-439-6400; AskNewswires@dowjones.com
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(END) Dow Jones Newswires
09-11-13 0531ETCopyright (c) 2013 Dow Jones & Company, Inc.
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