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Primark owner ABF leads FTSE, Reckitt Benckiser feels cyber attack pain
July 6, 2017 / 9:06 AM / 4 months ago

Primark owner ABF leads FTSE, Reckitt Benckiser feels cyber attack pain

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* FTSE 100 down 0.1 pct

* AB Foods jumps as results impress

* Cyber attack bites into Reckitt Benckiser’s growth

* Housebuilders gain after Bovis Homes resilience

* Novae Group soars on AXIS Capital takeover

By Helen Reid

LONDON, July 6 (Reuters) - Attention focused on earnings on Thursday, with a 5 percent rise in AB Foods leading a steady FTSE 100 index which was supported by the retail and housebuilding sectors.

AB Foods rose after reporting a better outlook thanks to an improved performance from budget clothing chain Primark, with Marks & Spencer following it higher with a 1.8 percent rise, although Next fell as it went ex-dividend.

“Some people have been thinking that the consumer is just going to go completely underground, but the evidence is that good companies that have the right offer at the right price can grow very strongly,” Jonathan Pritchard, retail analyst at Peel Hunt said.

Investors and analysts expect British consumers to swap to cheaper goods as inflation rises, something that could help low-margin companies offering budget prices offset higher import costs as a result of sterling’s weakness.

“AB Foods have found more mitigation than they expected and that’s because they have got volume growth, which helps their bargaining position with suppliers,” Pritchard added.

Elsewhere, Reckitt Benckiser cut its growth forecast in a surprise update, after the consumer goods firm was targeted in a worldwide attack which crippled computers at several multinational companies on June 27.

Reckitt, which sells Durex condoms and Dettol disinfectants was the worst-performing on the FTSE, down 2.1 percent.

Research shows cyber security breaches can erode companies’ share prices permanently.

Basic resources, often a support for the blue chip index, edged down on the day, with miner Antofagasta the worst performer after a downgrade to ‘sell’ from UBS.

But healthcare stocks supported the index as Shire gained after HSBC upgraded it to ‘hold’ from ‘reduce’.

Housebuilders, strong outperformers in the previous session, rose again after mid-cap Bovis Homes’ first-half results added to signs of resilience. The firm said it would spend an extra 3.5 million pounds to tackle problems related to the quality of its homes.

Bovis gained 1.7 percent, lifting Persimmon, Taylor Wimpey and Barratt Development.

Merger and acquisition news drove gains on the small-cap index, which outperformed larger stocks.

Novae Group jumped up to 23 percent after the insurer agreed to be taken over by AXIS Capital, a Bermuda-based speciality lines insurer and reinsurer, for 468 million pounds ($605 million) in cash.

Top Novae shareholder Neptune said the offer undervalues the firm. (Editing by Alexander Smith)

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