LONDON MARKETS: FTSE 100 Logs 5th Straight Record Close After Late-session Jump

By Sara Sjolin, MarketWatch

However, Next's warning weighs on retailers

U.K. stocks staged a late-session surge and erased earlier losses to finish at a record, supported by a rise in home-builder and bank shares.

The FTSE 100 index rose 0.2% to finish at 7,189.74, marking an all-time closing high for a fifth straight session.

The index had traded lower for most of the day, with shares of Next (NXT.LN) dropping 14% after the company warned on a challenging 2017 (http://www.marketwatch.com/story/next-warns-on-challenging-2017-as-brexit-kicks-in-2017-01-04) as the fallout from the U.K.'s Brexit vote starts to weigh on equities. The stock also fell on Tuesday after Deutsche Bank downgraded the stock to a hold from buy.

The announcement weighed on other U.K. retailers, with shares of Marks & Spencer Group PLC (MKS.LN)(MKS.LN) down 6.1% and Debenhams PLC (DEB.LN) 6.6% lower.

"Both of these face similar problems to Next--cost pressures and a failure to stay fresh in the eyes of consumers. Investors are clearly wary about high street dinosaurs as we head into an uncertain 2017, with Brexit, inflation and a weak pound all a major concern," said Neil Wilson, senior market analyst at ETX Capital, in a note.

Among other retailers, Primark-parent Associated British Foods PLC (ABF.LN) (ABF.LN) fell 3.7% and Burberry PLC (BRBY.LN) (BRBY.LN) dropped 2.1%.

Banks, however, rose and helped to push the FTSE into positive territory as they tracked gains for their European counterparts (http://www.marketwatch.com/story/european-stocks-flutter-around-1-year-high-as-banks-push-higher-2017-01-04) after Barclays struck an upbeat tone on Credit Suisse Group AG (CSGN.EB) (CSGN.EB).

Shares of Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) rose 1.5%, Barclays PLC (BCS) (BCS) added 1.3% and Standard Chartered PLC (STAN.LN) advanced 0.8%.

Housebuilders were also rising after encouraging data on the industry. The construction purchasing managers index for December rose to 54.2, its highest fastest pace of expansion since March 2016.

Additionally, mortgage approvals for November rose to an eight-month high of 67,505.

"A sustained uptick in mortgage approval rates could provide support to house prices and house-builder share prices, given that the latter remain depressed relative to where they were earlier in the year," said Russ Mould, investment director at AJ Bell, in a note.

Shares of Barratt Developments PLC (BDEV.LN) jumped 4.1% and Taylor Wimpey (TW.LN) climbed 3.8%.

(END) Dow Jones Newswires

January 04, 2017 12:08 ET (17:08 GMT)

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