LONDON MARKETS: FTSE 100 Falls As Profit Warning Puts Retailers Under Pressure

By Carla Mozee, MarketWatch

Bank of England Gov. Carney to speak

U.K. stocks pulled lower Tuesday, as a profit warning from a British department store Debenhams PLC dragged down shares of blue-chip retailers.

The FTSE 100 fell 0.3% to 7,423.32, with only the basic materials sector printing gains. A loss Tuesday would be the London benchmark's fifth in six sessions.

In focus for investors are comments from central bankers. Bank of England Governor Mark Carney will speak after the release of the bank's twice-yearly Financial Stability Report, while European Central Bank President Mario Draghi is appearing in Portugal at the bank's annual forum. Later Tuesday, U.S. Federal Reserve Chairwoman Janet Yellen gives a lecture in London at the Royal Academy.

Retailers under pressure: Retail shares lost ground after Debenhams (DEB.LN) said continued market volatility could leave its full-year profit at the lower end of expectations. But in the 15 weeks to June 17, like-for-like sales did rise 1.8%, it noted. Debenhams shares (DEB.LN) were down 3.9% off the FTSE 100.

After the warning, shares of department store chain Marks & Spencer Group PLC (MKS.LN) lost 2.4%, and apparel and home furnishings seller Next PLC (NXT.LN) dropped 1% on the FTSE 100. DIY retailer Kingfisher PLC (KGF.LN) gave up 0.6%.

"Recent figures from the Office for National Statistics show sales volumes in the retail industry are growing at their lowest level for 4 years, and Debenhams is feeling the pinch. Trends in its key sales metrics have gone into reverse in recent weeks," said George Salmon, equity analyst at Hargreaves Lansdown, in a note.

Supermarket sweep: Meanwhile, the country's four largest supermarket chains logged sales growth (http://www.marketwatch.com/story/uks-big-supermarkets-log-sales-growth-2017-06-27) in the 12 weeks ended June 18, but lost market share to German retailers Aldi and Lidl as consumers sought lower prices, according to a Kantar Worldpanel report.

Shares of J Sainsbury PLC (SBRY.LN) shed 0.5%, and Wm. Morrison Supermarkets PLC (MRW.LN) was off 0.1%. But Tesco PLC (TSCO.LN) shares moved up 0.9%.

Central bank speakers: The pound was slightly higher ahead of the release of the Bank of England's Financial Stability Report, due at 10:30 a.m. London time, or 5:30 a.m. Eastern Time, followed half an hour later by a speech by Carney.

The pound bought $1.2750 compared with $1.2721 late Tuesday in New York. The euro rallied after Draghi said at the ECB forum in Sintra that "a considerable degree" of stimulus is needed in the eurozone, a step back from the stimulus levels signaled in earlier speeches. The shared currency gained 0.4% against the pound.

Fed chief Yellen is scheduled to speak in London at 6 p.m. local time, or 1 p.m. Eastern.

Miners: Shares of metals producers pushed higher as Chinese Premier Li Keqiang said the country has experienced significant job creation from his program aimed at bolstering the world's second-largest economy. China is also a major buyer of industrial and precious metals.

In London, shares of miners Anglo American PLC (AAL.LN) and Rio Tinto PLC (RIO) climbed 2.7% and 2.1%, respectively.

Stock movers: At the bottom of the FTSE 100, shares of GKN PLC (GKN.LN) fell 2.5%, falling alongside Schaeffler AG (SHA.XE) after the German auto parts supplier cut its profit forecast for 2017.

(END) Dow Jones Newswires

June 27, 2017 05:20 ET (09:20 GMT)

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