By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- U.K. stocks ended lower on Thursday,
with many retailers posting losses following downbeat news about
Christmas sales, while the Bank of England's monetary policy
committee kept interest rates and quantitative easing on hold.
The U.K.'s FTSE 100 index fell 0.5% to end at 6,691.34.
The Bank of England's monetary policy committee left its
interest rates and quantitative easing policies on hold.
Speculation had been rising that a fall in unemployment could
trigger a change in the bank's forward guidance, something that has
fueled gains for the British pound.
The European Central Bank also left policy unchanged, with its
president Mario Draghi detailing the bank's commitment to its
low-rate policies.
Retailers commanded attention on Thursday. Shares of Wm.
Morrison Supermarkets PLC sank 7.8% after the retailer became the
latest to report a challenging Christmas trading performance. It
said full-year underlying profit would be at the bottom of the
range of current market forecasts.
Tesco PLC dropped 1.2% after the company said comparable U.K.
sales fell by 2.4% in the six weeks to January. J. Sainsbury PLC
shares dropped 2.4% and Next PLC fell 1.9%.
"Putting the disappointing numbers aside, the macro improvement
in the U.K. economy clearly isn't being reflected for the consumers
who remain cash-strapped as wage rises are not up with inflation,"
said Joe Rundle, head of trading at ETX Capital. "Shoppers in the
U.K. are now more sensible in the way they purchase their food
items -- either picking the higher end, [Waitrose for example and
even Sainsbury's to some degree] or the low-end [Aldi and Lidl --
both reporting strong Christmas trading numbers]."
"For M&S, Tesco and Wm Morrison, it's the outlook for these
retailers which worries the market -- unlike Waitrose and
Sainsbury's, these three have questionable strategies which are now
under intense scrutiny by shareholders and the market alike,"
Rundle said in a note.
Marks & Spencer Group PLC bucked the trend for retailers,
notching a 3.6% gain. The stock was the top riser for the FTSE 100.
The retailer said it saw an improved performance for general
merchandise over the holidays, with U.K. comparable sales down 0.2%
in the third quarter, but up 1% in the Christmas trading period.
Still, the quarterly performance fell below expectations, said
Marks & Spencer.
ARM Holdings PLC (ARMHY) was cut to hold from buy at Deutsche
Bank, which says it's waiting for better entry points for the chip
designer. Shares of the heavyweight sank 6.5%.
Support came from Tullow Oil PLC , which gained 3.1% after
analysts rated the stock a buy, according to news reports. CRH PLC
gained 2.4% after it got a buy rating from Deutsche Bank, according
to news reports.
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