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Retail stocks lead Britain's FTSE lower, with focus on U.S. jobs
September 4, 2015 / 8:13 AM / 2 years ago

Retail stocks lead Britain's FTSE lower, with focus on U.S. jobs

* FTSE 100 down 1 pct

* Next, Dixons Carphone fall on Exane BNP Paribas downgrades

* Fed rate rise question in focus ahead of non-farm payrolls

* Bwin.party plumps for GVC bid over 888

By Alistair Smout

LONDON, Sept 4 (Reuters) - Britain's top share index fell on Friday, led lower by weakness in retail and mining stocks, with the focus on U.S. jobs data later in the session that could provide clues as to when the Federal Reserve might raise interest rates.

Britain's FTSE 100 was down 62.11 points, 1 percent lower at 6,131.99 by 0801 GMT, giving away some of Thursday's 1.8 percent rise and leaving the index down around 2 percent for the week.

Top faller was Next, down 3.3 percent after Exane BNP Paribas cut its rating on the fashion retailer to "underperform" from "neutral", slashing its target price by 4 percent.

Electronics retailer Dixons Carphone also suffered from a downgrade from Exane BNP Paribas, falling 2.8 percent.

Other retail stocks came under pressure after data which showed August was the worst month for British retail sales since the global financial crisis of 2008.

The FTSE 350 General Retailers index was down 1.7 percent.

"The UK has been seen as a safe haven until quite recently, but weakness in retail is putting that into question," said Mike McCudden, head of retail derivatives at Interactive Investor.

Thursday's market rally was fuelled by the European Central Bank, after ECB President Mario Draghi said he would change or extend the central banks bond-buying stance if necessary.

Markets are also hoping for similarly dovish signals from the Federal Reserve. U.S. non-farm payrolls data, due at 1230 GMT, is the last major jobs data before the Fed meets in two weeks' time.

Economists polled by Reuters expect the U.S. economy to have produced 220,000 new non-farm jobs last month, continuing the robust rate of employment creation of the past five years, although a weaker reading may support the view that the Fed will keep rates low for longer.

Investors have pushed their predictions of a U.S. rate rise back to later in the year or even 2016 after a bout of market volatility, triggered by concern over China's growth, which has sent the FTSE around 10 percent lower since the start of August.

"The market has been under pressure due to predictions of a rate rise, but because of everything else that's going on, it's still highly unlikely. So the sort of weakness we see today could present a buying opportunity," Interactive Investor's McCudden said.

Bookmakers were in focus, after Bwin.party Digital Entertainment agreed to a buyout offer from GVC of about 1.06 billion pounds ($1.62 billion), shifting its stance after the poker and sports betting firm had accepted an earlier offer from rival 888 Holdings Plc.

Bwin.party rose 1.6 percent on the prospect of the takeover, while GVC and 888 fell 2.3 percent and 4.9 percent respectively.

Editing by Alison Williams

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