LONDON MARKETS: FTSE 100 Closes S Sharply Lower In Tobacco-led Stock Rout

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Barclays swings to loss; BT's profit hit

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U.K. stocks finished sharply lower on Friday, with a selloff in share of British American Tobacco PLC and Imperial Brands PLC leading the charge lower after a U.S. regulatory decision about the tobacco industry.

The FTSE 100 index was dragged down 1% to close at 7,368.37, with just a handful of components ending in the green. The blue-chip benchmark wrapped up the week down 1.1%, marking its first loss in four weeks.

Selling pressure was triggered after the U.S. Food and Drug Administration proposed plans for nicotine levels in cigarettes to be lowered to nonaddictive levels (http://www.marketwatch.com/story/fda-says-it-plans-to-lower-nicotine-levels-in-cigarettes-to-non-addictive-levels-2017-07-28).

Lucky Strike maker BATS (BATS.LN), which this week completed its purchase of Reynolds American Inc., fell 6.8%. Imperial Brands (IMBBY), whose portfolio includes Salem, Kool and Winston, ended 3.8% lower. Shares of each company, however, had lost roughly 14% just after the FDA's announcement was released.

"It might not sound great, but it doesn't read like the industry is destined to go up in smoke," Accendo Markets head of research Mike van Dulken wrote late Friday.

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"Firstly, this is a plan to start a public dialogue focused on protecting children and reducing tobacco related disease and death. Secondly, the fine print suggests balancing regulation of existing products with encouraging innovation for future less harmful options," he wrote.

As well, "never underestimate the lobbying power of the mighty tobacco industry."

Friday flop: U.K. stocks had struggled since Friday's session started, falling with equity gauges across Europe after tech stocks resumed a selloff (http://www.marketwatch.com/story/tech-stocks-poised-to-drive-another-record-day-on-wall-street-led-by-facebook-2017-07-27) on Wall Street on Thursday. Then after the close of Thursday trade, e-commerce behemoth Amazon.com Inc. (AMZN) posted a larger-than-expected drop of 77% in second-quarter earnings, hurt by the company's spending (http://www.marketwatch.com/story/amazon-earnings-fall-77-shares-drop-2017-07-27).

Back on the FTSE 100, BT Group PLC (BT.A.LN) shares on Friday gave up 1.8%, but finished off session lows. The decline came after the telecom and TV-services provider posted a slide first-quarter fiscal 2018 net earnings (http://www.marketwatch.com/story/bt-earnings-fall-on-higher-costs-backs-guidance-2017-07-28) to GBP285 million from GBP588 million a year earlier. But BT did back its full-year guidance.

International Consolidated Airlines Group SA (IAG.LN) swung lower to close down 0.1%. Shares had been higher after the parent company of British Airways said second-quarter net profit surged 20% (http://www.marketwatch.com/story/british-airways-parent-iags-profit-soars-2017-07-28) to EUR540 million ($631 million) on rising ticket prices.

Shares of budget carrier easyJet PLC (EZJ.LN) sagged 0.6%.

A choppy session for Barclays PLC (BCS) (BCS) left its shares down by 1.7%. The bank swung to a second-quarter loss of GBP1.4 billion (http://www.marketwatch.com/story/barclays-swings-to-loss-on-africa-write-down-2017-07-28)($1.83 billion) as it wrote down the value of its African operations and took higher provisions for conduct costs.

AstraZeneca PLC (AZN.LN) was among the few advancers on the FTSE 100. Shares rose 3.6%, recovering a portion of Thursday's 15% plunge after the drugmaker's Mystic treatment for lung cancer failed to meet its primary endpoint (http://www.marketwatch.com/story/astrazenecas-mystic-cancer-drug-trial-fails-2017-07-27) in a Phase 3 clinical trial.

The pound rose to $1.3124, up from $1.3066 late Thursday in New York. Sterling strengthened against the dollar (http://www.marketwatch.com/story/dollar-spins-wheels-ahead-of-gdp-report-expected-to-show-faster-clip-of-growth-2017-07-28) after a reading of U.S. gross domestic product in the second quarter came in at 2.6%, falling short of expectations for a 2.8% increase.

(END) Dow Jones Newswires

July 28, 2017 12:47 ET (16:47 GMT)