MILAN/LONDON (Reuters) - Britain’s top share index managed a modest gain on Monday as a deadlock in Brexit talks depressed domestic stocks but helped multinational exporter companies as it weakened the pound.
The stubborn problem of Britain’s land border with Ireland thwarted a drive to clinch a Brexit deal before a European Union summit this week, as negotiators admitted defeat after marathon talks and pressed pause for the coming days.
Sterling slipped to near a one-week low.
“A draft withdrawal agreement is more likely to be announced at an extraordinary EU summit in November (likely 17-18 November) than... at this week’s scheduled October summit,” wrote Goldman Sachs analysts.
Shares in multinationals British American Tobacco (BATS.L), Unilever (ULVR.L), Imperial Brands (IMB.L) and Reckitt Benckiser (RB.L) provided the biggest boost, rising as the weaker pound made their dollar earnings relatively more valuable.
Shares in precious metal miners Randgold Resources RRS.L and Fresnillo (FRES.L) were top gainers, up 5.2 and 4.1 percent respectively, as gold rose around 1 percent to its highest in about 2-1/2 months. [GOL/]
Analysts expect any no-deal scenario to lead to a significant downward revision to Britain’s economic growth, with sterling likely to fall further under such a scenario.
Profit warnings causing severe falls in mid-caps ConvaTec and Superdry stole the show.
The medical devices maker ConvaTec (CTEC.L) plunged 33.1 percent after lowering its expectations for revenues and margins, citing a change in inventory policy by its largest customer in its Infusion Devices business.
“ConvaTec’s pre-released results and revised 2018 guidance leave us with little hope for meaningful improvement in earnings trajectory within the next 2 years,” wrote UBS analysts.
“Revenue growth continues to disappoint, margin trajectory is negative and senior management turnover continues with the CEO’s sudden departure.”
Fashion group Superdry (SDRY.L) warned that 2018-19 profit could be as much as 17 percent below current expectations, blaming a hit to sales from unseasonably hot weather and rising foreign exchange costs. Its shares sank 21.2 percent.
Reporting by Danilo Masoni and Helen Reid; Editing by Kevin Liffey