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Britain's FTSE stalls as Tesco slips, May's speech awaited
October 4, 2017 / 8:56 AM / 2 months ago

Britain's FTSE stalls as Tesco slips, May's speech awaited

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* FTSE 100 down 0.1 pct

* Prime Minister May’s conference speech awaited

* Tesco reverses early gains after return to dividend

* Lower crude prices weigh on Shell, BP

* Stronger services data boosts pound, dents FTSE

By Helen Reid

LONDON, Oct 4 (Reuters) - Britain’s major share index faltered on Wednesday as a strong update from Tesco failed to enthuse investors, a rise in the pound weighed and investors awaited a speech by Prime Minister Theresa May from the governing Conservative Party conference.

The FTSE 100 dipped 0.1 percent as oil majors dragged, weighed by sliding crude prices, while consumer staples stocks made modest gains as investors reached for the safety of high-dividend stocks such as Unilever and British American Tobacco.

Growth in services activity unexpectedly sped up in September, boosting the pound.

Food retailers were among top fallers, with Tesco leading losses, down 2.1 percent and closely followed by Sainsbury and Morrisons.

Tesco had opened higher before reversing into negative territory, after Britain’s biggest retailer said it would resume paying a dividend for the first time in three years, also announcing first-half profit rose by 27 percent.

Tesco’s shares had risen sharply in the previous session as investors anticipated a return to payouts.

Tesco’s strong beat over earnings expectations was expected, Berenberg consumer goods analysts said.

“Whilst the dividend was reinstated, again this was expected and came in lower than expected at 1p (our risk arbitrage team was expecting 1.36p),” they added.

The next catalyst for Brexit barometer sterling was expected later in the day as investors awaited Prime Minister May’s speech at the Conservative Party conference, in which she was expected to try to reassert her authority.

Economists at UBS said the post-Brexit vote pattern of weaker pound and stronger FTSE could come to an end if the Bank of England went ahead with an interest rate rise, helping stabilise the pound at current levels and removing a key support for the internationally-exposed index.

In other company movers, oil majors Royal Dutch Shell and BP dipped, in line with a Europe-wide drop in energy stocks, as crude prices slipped over doubts that a recent rally wouldn’t last through the last three months of the year.

Standard Life Aberdeen shares fell 2.1 percent after the asset manager said it planned a subordinated debt issue.

Utility Centrica fell 2.4 percent after updating on maintenance work on its gas storage sites in the North Sea.

Reporting by Helen Reid; Editing by Keith Weir

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