LONDON MARKETS: U.K. Stocks Seesaw As Morrisons Drops, AB Foods Climbs

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- U.K. equities fell Wednesday, easing from a nearly two-week high, with Wm. Morrison Supermarkets PLC down after a broker cut its estimates on the grocery chain, while Associated British Foods PLC shares sweetened on its plans to expand overseas.

The FTSE 100 index slipped 0.1% to 6,677.75. The benchmark on Tuesday closed at its highest level since April 4, fueled by a rally in drug makers. A loss Wednesday would mark the index's first after three-consecutive sessions.

On the losing end of the index was ARM Holdings PLC , with shares of the computer-chip designer down 3.4% as the company's growth in royalty revenue came in at 3%, rising to $144.5 million for the first quarter. That figure was less than the 32% growth posted in the year-ago quarter. ARM reported a rise in overall quarterly profit.

Also hit was Morrisons , which dropped 3.7% after J.P. Morgan Cazenove reduced its per-share earnings estimates for 2015/2016 by 18%, in the wake of the company's annual report released last week.

But investors embraced a plan by Associated British Foods PLC to expand to the U.S., pulling shares up by 9.2% for their strongest gain since 2000, according to FactSet data. The company will open Primark stores in the northeastern region of the U.S., with the first one in Boston. Primark sells a range of products, including clothing and accessories and housewares. AB Foods also said strength in Primark and its grocery units aided in a rise in half-year profit.

The Primark's move in the U.S. toward the end of next year, "is sooner than we had anticipated, and whilst Primark will continue its measured approach to expansion, in our view this significantly increases the growth potential of Primark," said Panmure & Co. analysts Graham Jones and Damian McNeela, outlining their rating upgrade on AB Foods to buy from hold.

Meanwhile, investors received minutes from the Bank of England's policy meeting held earlier this month. The board voted 9-0 in favor of keeping interest rates on hold and making no changes to its 375 billion pound ($631 billion) asset-purchase program.

The meeting marked the central bank's last under previous guidance to raise its key interest rate until the unemployment rate remained above the 7% threshold. The bank reached that threshold sooner than it anticipated, with February's report showing the unemployment rate fell to 6.9%.

Separately on Wednesday, data showed U.K. borrowing was GBP107.7 billion ($181 billion) in the 2013-2014 fiscal year, the lowest amount since the worldwide financial crisis.

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