LONDON MARKETS: FTSE 100 Finishes Lower As M&S, Pearson Fall Sharply

Pound drops after no hawkish noises from Bank of England's Broadbent

The U.K.'s blue-chip equity benchmark finished lower Tuesday, with Pearson PLC shares swinging sharply lower in the wake of a $1 billion stake-selling deal, while Marks & Spencer Group PLC dropped after a disappointing update.

The FTSE 100 index gave up 0.6% to end at 7,329.76, pulling back after two winning sessions in a row (

Media giant mashed: Pearson PLC (PSON.LN) shares slid 5.1%, but they had been up roughly 3% in early trade after the education and publishing company said it's selling its 22% stake in Penguin Random House for $1 billion to German media company Bertelsmann SE, its joint-venture partner. The stock was the FTSE 100's biggest loser.

Investors feel the deal undervalues Pearson's stake in Penguin Random House, and they also fear the company is only selling that asset because its core business is struggling, said David Madden, market analyst at CMC Markets UK, in a note.

Retail: Marks & Spencer shares (MKS.LN) fell 4.7% for the FTSE's second-biggest loss, as the giant retailer said fiscal first-quarter 2018 like-for-like sales in the U.K. fell 0.5%. Food like-for-like sales were down 0.1%, while clothing and home sales on that basis declined 1.2%.

It also said U.K. group sales rose 2.6% year-over-year and that its full-year guidance is unchanged.

"M&S food sales continue to rise, driven by its store expansion program, and with around 200 new outlets to be opened by 2019, this should continue to add pounds and pennies to the bottom line. The continued fall in like-for-like sales at existing stores is a disappointment, however," said Laith Khalaf, senior analyst at Hargreaves Lansdown, in a note.

"Overall conditions for high street retailers remain pretty grim, with consumer purses under pressure and competition coming from all angles. M&S is swimming quite hard against this tide, so it deserves some credit for treading water," he said.

Shares of apparel and home furnishings retailer Next PLC (NXT.LN) were off 2.1% and DIY retailer Kingfisher PLC (KGF.LN) fell 1.5%.

Pound and policy makers: Meanwhile, sterling bought $1.2849, down from $1.2881 late Monday in New York.

The pound may have been hit by a speech from Deputy Gov. Ben Broadbent that hinted that he isn't eager to call for interest-rate rises in the near term.

Read:Will the Bank of England's 10-year hiatus on rate hikes end soon? What analysts say (

His speech in Aberdeen "gave no direct reference to his views on the outlook for U.K. monetary policy," but he was "very concerned about the U.K.'s trade prospects after Brexit," said Kathleen Brooks, research director at City Index, in a note. Brexit refers to the Britain's planned exit from the European Union.

"It doesn't seem like a stretch to assume that if Broadbent is concerned about Brexit's impact on trade, then he is unlikely to make things harder for exporters by voting to raise interest rates any time soon," Brooks said.

(END) Dow Jones Newswires

July 11, 2017 12:04 ET (16:04 GMT)