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* FTSE 100 down 0.4 pct
* Tesco soars after results
* United Utilities retreats after downgrade
By Kit Rees
LONDON, Oct 5 UK shares fell on Wednesday,
slipping from 18-month highs reached in the previous session,
though shares in grocer Tesco jumped after reporting
strong first-half results.
The blue chip FTSE 100 index was down 0.4 percent at
7,045.09 points by 0913 GMT, slightly outperforming the broader
European market which fell following concerns about the European
Central Bank's bond buying programme.
The FTSE 100 hit an 18-month high in the previous session
and breached the 7,000 point level for the first time since
mid-2015 as sterling dropped on fears that a "hard" Brexit from
the European Union could hurt the economy.
The FTSE 250 index also rallied and hit a record
"Ultimately, the pound has rebounded a little bit ... but I
think if it goes for a run towards the downside again, you may
see the FTSE start to edge up again," Michael Hewson, chief
market analyst at CMC Markets, said.
Shares in Tesco, Britain's biggest retailer, jumped more
than 10 percent after it reported a 60 percent rise in
first-half operating profit and lifted its margin target.
The supermarket also said it would increase investment in
its stores and distribution network to boost profitability over
the next three years.
Tesco's shares hit a 14-month high and were on track for
their biggest daily gain since January 2015, while shares in
peers Sainsbury and Morrison rose 1.4 percent
and 1 percent respectively.
"The clear beat on 1H profit and the very welcome guidance
means we expect the share price to build on its already strong
performance," analysts at Barclays said in a note, raising their
target price on the stock.
Among the fallers, United Utilities dropped 2.4
percent after RBC Capital Markets downgraded its rating to
Precious metals miners Randgold Resources and
Fresnillo also retreated, both down around 2.8 percent
after the price of gold hit a three-month low in the previous
session on a weaker dollar.
(Reporting by Kit Rees; editing by Susan Thomas)