Banks ordered to boost capital buffers
U.K. stocks finished in the red Tuesday, as a profit warning from British department store Debenhams PLC dragged down shares of blue-chip retailers, but gains for commodity stocks limited losses for the London benchmark.
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The FTSE 100 fell 0.2% to close at 7,434.36, suffering its fifth loss in six sessions.
A cloud over consumers: Retail shares lost ground after Debenhams (DEB.LN) said continued market volatility could leave its full-year profit at the lower end of expectations. But in the 15 weeks to June 17, like-for-like sales did rise 1.8%, it noted. Debenhams shares (DEB.LN) were down 2.3% off the FTSE 100.
After the warning, shares of department store chain Marks & Spencer Group PLC (MKS.LN) lost 2%, and apparel and home furnishings seller Next PLC (NXT.LN) dropped 1.1% on the FTSE 100. DIY retailer Kingfisher PLC (KGF.LN) finished flat on the day.
"Recent figures from the Office for National Statistics show sales volumes in the retail industry are growing at their lowest level for 4 years, and Debenhams is feeling the pinch. Trends in its key sales metrics have gone into reverse in recent weeks," said George Salmon, equity analyst at Hargreaves Lansdown, in a note.
Adding to the sector's gloom was YouGov/CEBR's survey showing a sharp drop in consumer sentiment (https://yougov.co.uk/news/2017/06/26/consumer-confidence-slumps-wake-hung-parliament/) to levels seen immediately after the U.K. voted last year to leave the European Union. A slump in optimism over property prices and a squeeze on Britons' household finances were the key factors behind the downbeat consumer sentiment, according to the survey.
Shares of home builders also struggled. Persimmon PLC (PSN.LN) shed 0.1%, Barratt Developments PLC (BDEV.LN) fell 0.2%, and Taylor Wimpey PLC (TW.LN) declined 0.6%.
Supermarket sweep: Meanwhile, the country's four largest supermarket chains logged sales growth (http://www.marketwatch.com/story/uks-big-supermarkets-log-sales-growth-2017-06-27) in the 12 weeks ended June 18, but lost market share to German retailers Aldi and Lidl as consumers sought lower prices, according to a Kantar Worldpanel report.
Shares of grocery chains were mixed. Wm. Morrison Supermarkets PLC (MRW.LN) turned higher by 0.2%, J Sainsbury PLC (SBRY.LN) slipped 0.4%, while Tesco PLC (TSCO.LN) moved up 1.3%.
Resources: As the euro strengthened, the dollar was pulled lower, aiding prices for most dollar-denominated commodities such as copper .
That, in turn, further lifted shares of metals producers. The sector started the session higher after Chinese Premier Li Keqiang said the country has experienced significant job creation (http://www.marketwatch.com/story/chinas-premier-li-touts-unimaginable-job-growth-2017-06-27) from his program to bolster the world's second-largest economy.
China is a major buyer of industrial and precious metals.
In London, miners Anglo American PLC (AAL.LN) and Rio Tinto PLC (RIO) climbed 3.2% and 3.3%, respectively, and copper producer Antofagasta PLC (ANTO.LN) tacked on 3.1%.
Meanwhile, Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) was up 1.1% and rival oil producer BP PLC (BP.LN) (BP.LN) was higher by 0.6% as oil prices traded higher for a fourth consecutive session. Crude tumbled into a bear market last week.
Banks: Bank shares took in stride the Bank of England's order to lenders to boost their capital cushions (http://www.marketwatch.com/story/bank-of-england-orders-banks-to-boost-capital-2017-06-27-5485570), a move aimed to protect the U.K.'s financial system from risks including Brexit and increased borrowing by consumers. The buffer was reduced to zero last year in a bid to support the economy after the Brexit vote.
Barclays PLC (BCS) was up 1.5%, Standard Chartered PLC (STAN.LN) moved up 1.8%, and Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) gained 0.3%.
The pound bought $1.2790, up from $1.2721 late Tuesday in New York.
Meanwhile, the euro rallied after European Central Bank President Mario Draghi said at an ECB forum in Sintra that "a considerable degree" of stimulus is needed in the eurozone, a step back from the stimulus levels signaled in earlier speeches. The shared currency gained more than 0.5% against the pound.
Fed Reserve Chairwoman Janet Yellen was scheduled to speak in London at 6 p.m. local time, or 1 p.m. Eastern U.S. time.
Read:Don't expect Yellen to signal retreat from Fed's interest-rate strategy (http://www.marketwatch.com/story/dont-expect-janet-yellen-to-signal-retreat-in-london-on-feds-interest-rate-strategy-2017-06-26)
Stock movers: At the bottom of the FTSE 100, shares of auto- and aerospace parts supplier GKN PLC (GKN.LN) fell 4.3% after German auto parts supplier Schaeffler AG (SHA.XE) cut its profit forecast for 2017.
WPP PLC shares (WPP.LN) fell 0.8% after the advertising heavyweight said IT systems at several of its businesses were hit by a suspected cyberattack (https://www.wsj.com/articles/cyberattacks-hit-global-companies-in-europe-1498575793). Other companies reported suspected cyberattacks Tuesday, including French building materials company Saint Gobain (SGO.FR).
(END) Dow Jones Newswires
June 27, 2017 12:19 ET (16:19 GMT)