London close: FTSE falls retailers tills ring hollow

London shares finished lower on Tuesday as the pound ticked up but with losses limited by a strong performance from the mining sector and as the pound lost momentum.

The FTSE 100 closed down 0.6% to 7,329.76 and the FTSE 250 was 0.7% lower at 19,215.39. Having initially climbed and put pressure on the Footie outwardly looking cohort, by the end of the business day the pound was down 0.25% against the dollar and 0.5% against the euro at 1.2849 and 1.1243.

Markets had earlier been expecting some crumbs from the Bank of England's two policymakers speaking either side of lunchtime, but neither delivered much for currency traders to feed on.

BoE chief economist Haldane - who turned more hawkish on interest rates last month - spoke at 1100 BST and deputy governor Ben Broadbent later, but neither said anything about monetary policy.

"Mr Haldane has been calling for higher interest rates recently, so dealers were anticipating something similar today, but the Bank of England’s monetary policy wasn’t mentioned. Mr Broadbent discussed international trade, but not his views on interest rates. Dealers were disappointed with the lack of monetary policy remarks, so they had little reason to be long the pound," said analyst David Madden at CMC Markets.

Heavily-weighted mining stocks were among the top performers as copper prices rose and amid speculation that China may start to raise liquidity.

In addition, market participants pointed to a report that workers at Antofagasta and Barrick Gold's Zaldívar copper mine in Chile have voted to strike after talks failed. Anglo American, Glencore, Fresnillo and Rio Tinto were the top four gainers.

Meanwhile, investors were digesting a report from ratings agency Standard & Poor's suggesting that UK GDP will likely slow to 1.4% this year and 0.9% next year and that the BoE's current ultra-accommodative stance should continue over the medium term, with no rate hike before mid-2019.

"Growth is set to remain on a moderate trajectory as imported inflation squeezes household budgets and uncertainty about the outcome of the EU exit negotiations dampens investment," it said.

On the data front the monthly BRC-KPMG sales monitor revealed that hot weather helped UK retail sales pick up more than expected last month. Like-for-like retail sales in June were 1.2% higher than the same month last year, recovering well from a 0.4% fall in May and ahead of 0.8% City consensus.

Despite this seeming good news, commentary suggested the tightening of the consumer purse could mean this ray of sunshine is soon to be clouded over, with retailers liberally sprinkled among the fallers thanks to some hard evidence from Marks & Spencer's trading update.

M&S revealed like-for-like sales remained negative in the first quarter. LFL clothing and homeware sales fell 1.2% in the 13 weeks to 1 July and food sales were down 0.1%, dragging UK LFL sales to 0.5%.

This "rather put the frighteners on UK retail stocks" said IG's Chris Beauchamp, with Primark owner AB Foods, Next, Dunelm and JD Sports among the fallers, along with food suppliers Greencore and Dairy Crest.

Beauchamp was not optimistic for the sector outlook, saying: "the picture on UK consumer spending, from both the top-down and bottom-up perspectives, remains quite uninspiring, and that’s before you take Amazon into account".

Elserwhere, Publishing house Pearson reversed earlier gains to trade lower after announcing the sale of a 22% stake in Penguin Random House to Bertelsmann and recapitalising the business, generating total net proceeds of about $1bn (£776m) with £300m ($386m) being returned to shareholders.

Construction and support group Carillion tanked for the second day running as analysts picked apart the company's horrendous trading update at the start of the week.

Recruitment company PageGroup fell despite posting record second-quarter profits, while Cairn Energy was in the red despite announcing that it has found oil at its latest well offshore Senegal.

Housebuilding and construction group Galliford Try was top of the risers after it said full year profits would be at the upper end of analysts forecasts of £46-59m although it sounded a note of caution about political uncertainty in the UK after June's General Election. In a trading update, the company said its Linden Homes and Partnerships & Regeneration units were expected to deliver increased revenue and improved operating margins, while newer contracts in construction were performing well.

Builders' merchant Grafton racked up healthy gains as it reported a 9% rise in first-half revenue, while Gocompare gained as it said it expects to report a 22% increase in first-half adjusted operating profit, driven mostly by an improvement in marketing margin.

Market Movers

FTSE 100 (UKX) 7,323.57 -0.63%
FTSE 250 (MCX) 19,212.54 -0.75%
techMARK (TASX) 3,475.25 -0.60%

FTSE 100 - Risers

Glencore (GLEN) 307.50p 2.14%
Anglo American (AAL) 1,084.50p 1.54%
Fresnillo (FRES) 1,447.00p 1.19%
Worldpay Group (WPG) 376.00p 0.80%
Rio Tinto (RIO) 3,425.50p 0.79%
TUI AG Reg Shs (DI) (TUI) 1,142.00p 0.71%
HSBC Holdings (HSBA) 742.60p 0.58%
Antofagasta (ANTO) 828.00p 0.49%
Severn Trent (SVT) 2,200.00p 0.46%
Unilever (ULVR) 4,222.50p 0.43%

FTSE 100 - Fallers

Pearson (PSON) 655.00p -5.14%
Marks & Spencer Group (MKS) 323.10p -4.69%
Associated British Foods (ABF) 2,845.00p -4.08%
Prudential (PRU) 1,750.00p -2.70%
Burberry Group (BRBY) 1,580.00p -2.47%
British Land Company (BLND) 596.00p -2.13%
Next (NXT) 3,617.00p -2.06%
Experian (EXPN) 1,544.00p -1.84%
InterContinental Hotels Group (IHG) 4,215.00p -1.82%
Land Securities Group (LAND) 1,002.00p -1.76%

FTSE 250 - Risers

Galliford Try (GFRD) 1,261.00p 8.05%
Kaz Minerals (KAZ) 563.00p 4.16%
Syncona Limited NPV (SYNC) 172.00p 2.50%
Vedanta Resources (VED) 723.50p 2.26%
PZ Cussons (PZC) 346.40p 1.85%
Grafton Group Units (GFTU) 719.00p 1.48%
IP Group (IPO) 130.50p 1.48%
Evraz (EVR) 222.40p 1.41%
Computacenter (CCC) 887.00p 1.37%
Centamin (DI) (CEY) 157.10p 1.35%

FTSE 250 - Fallers

Carillion (CLLN) 77.90p -33.48%
Dunelm Group (DNLM) 557.00p -4.21%
St. Modwen Properties (SMP) 342.30p -3.41%
Man Group (EMG) 148.70p -3.25%
Big Yellow Group (BYG) 760.00p -3.12%
Rank Group (RNK) 220.80p -3.12%
Dixons Carphone (DC.) 269.80p -2.95%
Greencore Group (GNC) 231.10p -2.86%
Metro Bank (MTRO) 3,551.00p -2.79%
Dairy Crest Group (DCG) 547.50p -2.75%