U.K. stocks fell from the highest level since July as the U.S. economy expanded less than forecast and private bondholders pressed on in talks with the Greek government for a debt-swap agreement.

BP Plc (BP/) dropped 2.7 percent after a U.S. court ruled that the oil company can’t recover part of the cleanup costs of the 2010 Gulf of Mexico spill from Transocean Ltd. InterContinental Hotels Group Plc lost 2.5 percent after UBS AG advised selling the shares.

The FTSE 100 fell 64.14, or 1.1 percent, to 5,731.06 at 1:52 p.m. in London, paring gains this week to less than 0.1 percent. The gauge has still risen 2.9 percent this year amid signs that the U.S. economy is recovering and after the European Central Bank moved to ease bank lending through its long-term refinancing operation. The FTSE All-Share Index lost 1 percent today, while Ireland’s ISEQ Index dropped 0.4 percent.

“We’re still cautious on the outlook for equities at present,” said Sally Davies, a fund manager at Octopus Investments in London, which has assets of 2.5 billion pounds ($3.9 billion). “We still think that the LTRO, whilst making the potential collapse of the euro zone much less likely, is little more than a temporary sticking plaster covering a deeper wound.”

The Institute of International Finance, which represents private creditors, said that it made “some progress” at a meeting last night in Athens between managing director Charles Dallara and Greek Prime Minister Lucas Papademos.

Greece and its creditors have haggled over how to reduce the country’s borrowings three months after private bondholders agreed to a 50 percent cut in the face value of more than 200 billion euros ($262 billion) of debt by voluntarily swapping bonds for new securities.

Stocks extended declines after a report showed the U.S. economy expanded less than forecast in the fourth quarter as consumers reduced savings in order to boost spending and government agencies cut back.

Gross domestic product climbed at a 2.8 percent annual following a 1.8 percent gain in the prior quarter, according to Commerce Department figures. The median forecast of 79 economists surveyed by Bloomberg called for a 3 percent gain.

BP dropped 2.7 percent to 464.05 pence. The U.S district judge in New Orleans ruled the company can’t collect from Transocean part of the $40 billion in cleanup costs and economic losses caused by the 2010 oil-well blowout and Gulf of Mexico spill.

BP must indemnify Transocean for pollution-related economic damage claims under its drilling contract, the judge said. London-based BP sued Transocean in April to recover a share of its damages and costs from the spill.

InterContinental Hotels (IHG) slid 2.5 percent to 1,323 pence. UBS cut its recommendation on the shares to “sell” from “neutral.”

Creston Plc (CRE) slumped 23 percent to 51.25 pence. Profit before tax for the full year will be slightly below last year, Espirito Santo analysts said.

African Barrick Gold Plc advanced 5.2 percent to 515 pence, its highest price in seven weeks, after it reported a fourfold increase in a deposit in Tanzania.

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(Blomberg)