LONDON MARKETS: FTSE 100 Ends Lower, Retreating From Record As Home Builders, Retailers Fall

By Carla Mozee and Victor Reklaitis, MarketWatch Features Dow Jones Newswires

Micro Focus shares hit; U.K. cabinet reshuffled

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U.K. stocks closed lower Monday, with shares in retailers and home builders losing ground and helping to pull back London's blue-chip benchmark from the prior session's record high.

What the market is doing: The FTSE 100 index fell 0.4% to end at 7,696.51 after Friday's finish at a record (http://www.marketwatch.com/story/ftse-100-powers-to-fresh-record-as-dow-25000-inspires-european-stock-rally-2018-01-05). (http://www.marketwatch.com/story/ftse-100-powers-to-fresh-record-as-dow-25000-inspires-european-stock-rally-2018-01-05) Last week, the benchmark rose 0.5%.

The pound traded at $1.3567, roughly unchanged from $1.3569 late Friday in New York.

What's driving the market: Some 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 also watched developments on the U.K. political front as U.K. Prime Minister Theresa May reshuffled her cabinet (http://www.marketwatch.com/story/uk-prime-minister-may-shakes-up-cabinet-in-face-of-brexit-pressure-2018-01-08). 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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Check out:These 5 charts are all 'flashing green' for more U.K. stock records (http://www.marketwatch.com/story/these-5-charts-are-all-flashing-green-for-more-uk-stock-records-2018-01-08)

Corporates: Off the FTSE 100, Mothercare shares (MTC.LN) sank 28% 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)

"We are not anticipating any improvement in the short-term market conditions for the U.K. and on this basis the adjusted group profit for the year is likely to be in the range of GBP1 million-GBP5 million," said Mothercare in a statement.

In the retail group, stock in Marks & Spencer Group (MKS.LN) (MKS.LN) fell 0.9% and Kingfisher PLC (KGF.LN) shed 0.7%. But Next PLC (NXT.LN), which last week raised its yearly guidance (http://www.marketwatch.com/story/nexts-online-sales-get-a-boost-from-cold-weather-2018-01-03), was up by 1.6%.

Among home builders, Persimmon (PSN.LN) lost 1.1%, Barratt Developments PLC (BDEV.LN) fell 1.6%. and Taylor Wimpey PLC (TW.LN) gave up 1.2%. That was after Halifax said U.K. home prices fell 0.6% in December on a month-over-month basis (https://static.halifax.co.uk/assets/pdf/mortgages/pdf/December-2017-House-Price-Index.pdf), marking the first fall since June. Price growth slowed to 2.7% annually in 2017, it said.

Micro Focus International PLC (MCRO.LN) tumbled 17% after the software maker said six-month revenue fell on constant-currency terms and a key profit metric, adjusted EBITDA, was lower by 4.1% "as we put operational improvement plans on hold while working on the completion of the HPE Software transaction." The company acquired Hewlett Packard Enterprise Co.'s (HPE) software business for $8.8 billion last year.

Micro Focus also expects a decline in revenue for the year ending Oct. 31, 2018, and 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.

G4S PLC (GFS.LN) rose 4% after UBS analysts upgraded to provider of security services to a buy rating, saying the company is in "pole position in an evolving cash-handling market."

Shire PLC shares (SHPG) (SHPG) tumbled 5.4% after the drug company said it plans to operate as two separate divisions (http://www.marketwatch.com/story/shire-announces-reorganization-sets-sales-target-2018-01-08)and estimates that its total revenue will reach $17 billion to $18 billion by 2020.

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 12:21 ET (17:21 GMT)