LONDON (Reuters) - Britain's FTSE inched lower on Tuesday, weighed down by losses among pharma stocks, while updates from Carpetright (CPRC.L) and Debenhams (DEB.L) gave conflicting pictures of the health of British consumers as inflationary pressures start to bite.
The FTSE 100 .FTSE ended down 0.2 percent, erasing almost all the previous session's gains, with the pharma sector taking most points off the blue chip index.
A profit warning by German's Schaeffler (SHA_p.DE), which sent its shares spiralling down 12 percent, weighed on British car parts supplier GKN (GKN.L), which fell 4 percent, topping losers on the FTSE.
"While we were braced for GKN to have a tougher second quarter after a strong first quarter, we suspect Schaeffler's mention of pricing pressure will still send a shiver down the spine of most observers," Jefferies analysts said.
They added, however, that they hesitated to make a direct read-across to GKN.
Travel and leisure stocks were among the worst performers, with tour operator TUI (TUIT.L) down 2 percent after Barclays cut its target price on the stock. A downgrade to sell from Investec weighed on gambling company William Hill (WMH.L) on the mid-caps as well.
Strength among miners lent the FTSE a helping hand, pushing it slightly ahead of European peers. Anglo American (AAL.L), Rio Tinto (RIO.L), Antofagasta (ANTO.L), BHP Billiton (BLT.L) and Glencore (GLEN.L) were the top gainers.
UK banks .FTNMX8350 faltered but ended up 0.5 percent after the Bank of England tightened its controls on bank credit to more normal levels, deciding the risk had passed of a big hit to the economy after last year's Brexit vote.
Jefferies said the BoE decision was expected and even though dividends would not be put at risks, the higher capital buffers reintroduced by the central bank could dampen expectations of excess capital being returned to investors.
Updates from small-caps Debenhams and Carpetright provided further pieces of the puzzle as investors continued to seek clarity on the resilience of the UK consumer.
"Both Debenhams and Carpetright are heavily dependent on the health of the UK consumer," said Edward Park, investment director at Brooks Macdonald. "With wage growth softening at the same time as inflation is beating expectations, there is a real wage growth squeeze on individuals."
"Additionally, savings levels are low which means consumers have less slack to bear these reductions in purchasing power," he added.
Against this tense backdrop, there was relief as a positive trading update from Carpetright sent the carpet provider's shares up 10.4 percent.
It had suffered a sharp fall in late April after nudging its profit forecast down, indicating consumers were cutting back on spending on larger-ticket items related to home renovation.
Its shares scored their best day in five months, but their value had still eroded 25 percent from their levels prior to the forecast trimming.
Debenhams, however, fell 2.2 percent to an eight-year low after it flagged a more volatile trading environment and said sales slid. Its 2017 profit could land towards the lower end of expectations if conditions did not improve, Chief Executive Sergio Bucher said.
Marks & Spencer (MKS.L), which sells clothes and home items alongside food, fell 1.9 percent, weighed down by Debenhams.
Shares in the world's biggest advertising agency WPP (WPP.L) fell 0.8 percent after falling victim of a global cyber attack.
Reporting by Helen Reid and Danilo Masoni; Editing by Alison Williams