London lags behind Europe on retail fears
Concerns about consumption dragged on Britain's top share index yesterday, partly offset by gains among banks after the US Federal Reserve signalled that another rate rise was on the cards this year.
The FTSE 100 closed 0.1pc lower at 7,263.90 points, underperforming a positive European market which was boosted by gains among banking stocks.
British banks were among the strongest gainers, with Lloyds, Barclays and Royal Bank of Scotland up between 1.6pc-2.6pc.
Banks have struggled with low interest rates, which has put pressure on their margins. The sector was boosted recently by more hawkish rhetoric from the Bank of England, which said that a rate rise was likely in coming months.
"The prospect of higher rates in the key US market, and indeed even the possibility of a modest rate rise in the UK, has prompted investors to buy up financial services stocks in hope of better margins and improved profits and dividends", Chris Beauchamp, chief market analyst at IG, said. Increased expectations of a Fed rate hike boosted the dollar, which in turn weighed on greenback-denominated commodities including copper and gold.
Household goods and retailers sustained heavy losses as worries for British consumers mount: Kingfisher and Sainsbury were both down 4.1pc.
Outsourcer Capita was the worst performer in the pan-European STOXX 600 with an 11.6pc fall after disappointing first-half results.
Deal-making spurred a 2.4pc jump in CRH's shares. It rose after agreeing to buy US cement maker Ash Grove Cement. "We think the transaction marks a strategic entry into the US cement market at a reasonable price, where CRH currently only has a small presence and will complement its significant aggregates, asphalt and ready mix operations," analysts at UBS said in a note.