LONDON MARKETS: FTSE 100 Eases Back From Record As Retailers, Home Builders Fall

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Micro Focus shares hit; U.K. cabinet set for reshuffle

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U.K. stocks edged back Monday, with shares of retailers and home builders losing ground and pulling London's blue-chip benchmark slightly away from a record high.

What the market is doing: The FTSE 100 index slipped 0.1% to 7,717.88, stepping back from Friday's all-time closing high of 7,724.22. Last week, the benchmark added 0.5%.

The pound traded at $1.3542, compared with $1.3569 late Friday in New York.

What's driving the market: Retail stocks were under pressure after baby-care products retailer Mothercare PLC released a profit warning. That comes on the heels of last week's profit warning from department store chain Debenhams and a report from the British Retail Consortium (https://brc.org.uk/news/2017/december-discounts-spur-shop-price-slide) that showed U.K. store prices fell 0.6% in December (https://brc.org.uk/news/2017/december-discounts-spur-shop-price-slide) year-over-year, as retailers offered discounts at the beginning of the Christmas month.

Investors will also watch for developments from the U.K. political front as U.K. Prime Minister Theresa May reportedly signaled that she is in the process of reshuffling her cabinet (http://www.bbc.co.uk/news/uk-politics-42597785). On Sunday, May said in a BBC interview that she's aiming to reach a post-Brexit transition deal with the European Union by the end of March.

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Corporates: Mothercare shares (MTC.LN) sank 27% after the retailer said comparable sales for the 12-week period to Dec. 30 fell both in the U.K. and internationally and its overall group performance has fallen short of expectations. (http://www.marketwatch.com/story/mothercare-christmas-sales-fall-warns-on-profit-2018-01-08)

In the retail group, stock in Marks & Spencer Group (MKS.LN) (MKS.LN) fell 0.7% as did shares in Kingfisher PLC (KGF.LN). But Next PLC (NXT.LN) bucked the trend by rising 0.4%.

Among home builders, Persimmon (PSN.LN) lost 0.9%, Barratt Developments PLC (BDEV.LN) fell 0.8% and Taylor Wimpey PLC (TW.LN) gave up 0.7%. Halifax said U.K. home prices fell 0.6% in December on a month-over-month basis, and price growth slowed to 2.7% annually in 2017.

Micro Focus International PLC (MCRO.LN) shares fell 12% after the software maker said Chief Financial Officer Mike Phillips will move to a new role (http://www.marketwatch.com/story/micro-focus-2018-profit-bets-boost-from-hpe-buy-2018-01-08) of director of mergers and acquisitions and that he will be succeeded as CFO by Chris Kennedy with immediate effect.

What strategists are saying: "Clearly Mothercare et al are up against it and the update does not bode especially well for the retail sector ahead of an important week of releases. Overnight Visa/IHS data shows a significant slowdown in spending in December which meant 2017 saw a fall in spending for the first time in 5 years," said Neil Wilson, senior market analyst at ETX Capital, in a note.

(END) Dow Jones Newswires

January 08, 2018 04:23 ET (09:23 GMT)