2:00PM New York, 7:00PM London - U.K economy growth slowed in the fourth quarter on a slowdown in services and retails sales.

Stocks in U.K. plummeted as economy expanded at slower pace in the fourth quarter ending in December 2007 at 0.6%, lower than 0.7% growth in the third quarter.

In London trading, FTSE100 dropped 2.28% or 130.80 to 5,609.3. Of the 102 FTSE 100 stocks 27 gained, 74 declined, and one was unchanged.

Alliance & Leicester led advancing stocks with a rise of 5.96% on reports that the government plans to rescue depositors funds in Northern Rock through a private sell of the mortgage lender.

Other financial stocks gained on the news. Standard Chartered Bank Plc climbed 3.06%, HSBC Holdings Plc gained 3.04%, and Barclays Bank edged up 1.63%.

The Office of National Statistics reported on its Web site today that GDP increased 0.6% in the three months to December 2007 compared to a 0.7% jump recorded in the third quarter as the total increase in total production output was trimmed by weaker growth in services.

Economy grew at 3.1% in 2007.

Total production output in the fourth quarter surged 0.3% from no growth in the three months to September buoyed by a strong output growth in mining which advanced at 1.1% compared to a 1.1% decline a year ago in the same period.

However, manufacturing growth output was unchanged from the third quarter, while electricity, gas and water edged higher from 0.8% in the quarter to September to 1.7% in the quarter ended December.

According to the statistics office, total service output tumbled from 0.8% to 0.7% in the quarter under review due to weaker growth in business service and finance, which plunged 0.4% in the fourth quarter from 1.3% as growth slowed in computing services and financial intermediation.

The largest growth in total service output was in transport, storage and communication rising 1.9% in the fourth quarter compared to 0.5% the previous month.

Distribution, hotels and restaurants jumped 1.0% from 0.8% in the third quarter with wholesale making the largest contribution while retailing declined.

Construction growth also fell to 0.7% from 0.8% in the third quarter, while agriculture spiked 1.3% in the quarter to December from 0.6% from a quarter earlier.

The Bank of England said today on its Web site the long-term inflation expectations have remained broadly stable, adding that upside risks to inflation from supply side developments had increased because of changes in food, energy prices and the exchange rate.

Of the 102 FTSE 100 stocks Alliance & Leicester led advancing stocks with a rise of 5.96% followed by gains in Carnival Plc of 4.72%, in Experian Group of 3.84%, in British Airways Plc of 3.63%, and in Anglo American Plc of 3.38%.

Financial stocks gained on reports that the government will protect depositors’ funds in Northern Rock by making a private sell of lender, ending speculation that the government had opted to nationalize it.

British Airways climbed after a report from the statistics office showed that air transport made a significant contribution to service sector output.

Kingfisher Plc led decliners in the FTSE100 stocks with a drop of 5.29% followed by declines in Royal Dutch Shell of 5.29%, in British Energy of 4.94%, and in Sage Group of 4.83%.

Retailers also fell on expectations that the economy is slowing. Wolseley Plc shed 3.63% and Tesco plunged 3.58%.

Tullow Oil reported today in its trading update and operational update published on its web site today that working interest production averaged rose 13% from 2006 to 73,100 barrels per day, adding that gross production from Equatorial Guinea assets exceeded 100,000 barrels per day.