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FTSE retreats from near-record high, Tesco jumps
October 5, 2016 / 10:38 AM / a year ago

FTSE retreats from near-record high, Tesco jumps

LONDON (Reuters) - Britain’s top share index retreated on Wednesday after reaching to a near-record high in the previous day, with miner Polymetal slumping (POLYP.L) following concerns about its dividend payout and United Utilities (UU.L) hit by a broker downgrade.

People walk through the lobby of the London Stock Exchange in London, Britain November 30, 2015. REUTERS/Suzanne Plunkett

However, Tesco (TSCO.L) shares surged after its results.

Russia’s Polymetal fell 5.7 percent, the worst performer in the FTSE 100 index, after saying that it would decide on whether to pay a special dividend on 2016 results, depending on gold price in the fourth quarter.

The miner was also hit by weaker gold prices XAU=, which resulted in a 4 percent and 2.8 percent fall in shares of Randgold Resources (RRS.L) and Fresnillo (FRES.L) respectively.

“Given the collapse in the gold price, the shares of gold miners are understandably under pressure,” Jasper Lawler, analyst at CMC Markets, said.

United Utilities (UU.L) dropped 4.4 percent after RBC Capital Markets downgraded its rating to “underperform”.

The-blue chip FTSE 100 .FTSE closed 0.6 percent lower. It rose 1.3 percent on Tuesday after coming within striking distance of its lifetime high, reached in April last year, following a further drop in the pound.

Tesco (TSCO.L) finished 9.8 percent stronger after hitting a 14-month high and recording its best one-day gain since January 2015 as Britain’s biggest retailer reported a 60 percent rise in first-half profit and lifted its margin target.

Tesco also said it would increase investment in its stores and distribution network to boost profitability over the next three years.

“The green shoots of recovery continue to sprout at Tesco,” Laith Khalaf, senior analyst at Hargreaves Lansdown, said.

Barclays raised its target price for the stock, saying that the clear beat on first-half profit and the very welcome guidance means the share price was expected to build on its already strong performance.

The FTSE 100 index is up 12 percent so far this year. It 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 .FTMC index also rallied and hit a record high a day earlier, before falling 0.8 percent on Wednesday.

Editing by Alison Williams

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