LONDON MARKETS: FTSE Flat; News Corp. Abandons Bid For BSkyB

By Simon Kennedy, MarketWatch

LONDON (MarketWatch) -- Britain's benchmark stock index was little changed Wednesday, while shares of British Sky Broadcasting Group PLC slipped after News Corp. announced it was withdrawing its bid to take over the firm.

The FTSE 100 index was nearly flat at 5,867.80, as other European markets also held in a fairly tight range.

Shares of British Sky Broadcasting dropped 0.9%, paring their intraday losses. They have fallen nearly 19% over the past month.

News Corp. (NWSA) (NWS) announced Wednesday it no longer plans to make an offer for the shares in BSkyB it doesn't already own, saying "it has become clear that it is too difficult to progress in this climate."

The announcement comes in the wake of a growing phone-hacking scandal in the U.K. involving newspapers owned by News Corp.

"We welcome the news," said a Downing Street spokesman in an emailed statement, responding to the BSkyB bid withdrawal. "As the prime minister has said, the business should focus on clearing up the mess and getting its own house in order."

News Corp. also owns MarketWatch, the publisher of this report.

Burberry and miners

Shares of Burberry rallied 4.4% after the fashion house said underlying sales jumped 34% in the latest quarter, beating analyst expectations. Comparable-store sales rose 15% excluding China, where growth was 30%, the group said.

Seymour Pierce analyst Kate Calvert described the results as "a faultless start to the year" and said she expects to see consensus earnings forecasts for Burberry and price targets rise following the results.

Miners were the other big climbers Wednesday as commodity prices rose and as the latest data on Chinese economic growth came in slightly ahead of market expectations. Silver miner Fresnillo PLC rallied 5.1%, also buoyed by rising silver prices.

African Barrick Gold PLC climbed 5.1% as gold prices hit a record and after the stock was upgraded to neutral from sell at Goldman Sachs, which cited its attractive valuation.

Marks & Spencer weighs on retail sector

Marks & Spencer (MAKSY) was the worst performer within London's benchmark index, dropping 3.5% after reporting a 3.2% increase in total group sales for its fiscal first quarter.

Santander analyst Rebecca McClellan said that expectations for the retailer had been rising following a relatively strong trading update from Debenhams PLC . However, she said the figures for Marks & Spencer were slightly below expectations and benefited from one-off factors, including a strong April and an early start to sales.

"Stripping out these benefits, the trend going forward is likely to fall into negative territory," McClellan said in a note to clients.

Among other retailers, shares of Next PLC lost 1.3% and Debenhams sank 2.2%.

Mid-cap fashion retailer Supergroup PLC bucked the trend, surging 22% after it reported an 89% jump in underlying pretax profit for the fiscal year.