FTSE Close: Next, M&S up; United Utilities down

By Ed Monk for Thisismoney.co.uk
Updated: 12:58 EDT, 15 September 2010

17.15 (close)

Flat opening: No big movements are expected this morning.

Bullish comments from Next breathed life into the retail sector today but failed to prevent the London market's first loss in six sessions.

Next shares leapt nearly 7% - up 136p at 2176p - after it stuck by profits guidance and defied fears over current headwinds in the sector, to flag possible long-term shareholder returns of between 9% and 15% a year.

This was met with relief among other retail stocks but the overall London market failed to sparkle during a rare recent session on the back foot.

The FTSE 100 Index finished 11.8 points lower at 5555.6, while the Dow Jones Industrial Average opened in similar fashion on Wall Street.

Sentiment was hit by a slowdown in industrial production growth in the United States and a worse than expected survey into the state of manufacturing industry in and around the New York region.

The pound was stronger against the dollar and the euro but the main focus for traders was on Japan after the country's central bank intervened in currency markets for the first time in six years.

The surprise move to sell the yen and buy dollars will help exporters and prevent the currency's recent strength from derailing recovery hopes.

In London, stocks in the retail sector dominated the FTSE 100 Index risers board despite Next's warning that prices will rise next year due to higher raw material costs and January's VAT hike to 20%.

Marks & Spencer lifted 12.6p to 379.6p, B&Q owner Kingfisher gained 7.2p to 218.9p and Argos firm Home Retail Group added 2.1p to 214.5p.

Elsewhere in the sector, French Connection shares were 4% higher after its founder and chairman Stephen Marks said the brand was back on track after reporting half-year profits from those businesses being retained in the wake of a restructuring. The stock lifted 2p to 47p.

Numis Securities said French Connection had "gathering momentum" after tackling the non-core and loss-making elements of the business.

Back in the top flight, shares in utility firms were under pressure after Goldman Sachs reviewed its ratings for the sector. It left United Utilities 10p lower at 585p, while Scottish & Southern Energy dropped 17p to 1162p.

In the second tier, power station Drax dropped 4% or 15.7p to 398.2p after JP Morgan Cazenove downgraded the stock following a recent rise in its share price.

BP shares fell 11.1p to 404.1p as it emerged that inspections on its North Sea installations found a number of them did not comply with guidelines over regular training for offshore operators on how to respond to an incident.

However, chief executive Tony Hayward defended the firm's safety record in the North Sea and told MPs that recent criticisms had not exposed "any fundamental weakness".

In corporate results, construction firm Galliford Try lifted 2.75p to 296.25p after it reported a 56% rise in profits from its housebuilding division.

The biggest Footsie risers were Next up 136p at 2176p, Marks & Spencer ahead 12.6p at 379.6p, Kingfisher up 7.2p at 218.9p and SABMiller ahead 43p at 2011.5p.

The biggest fallers were African Barrick Gold down 21p at 598p, BP off 11.1p at 404.1p, Barclays down 7.25p at 316.75p and Eurasian Natural Resources off 18.5p at 866p.

15.10 The Dow Jones has slipped 7.4 points to 10,519.1 points as data today showed US industrial output slowed in August and a measure of New York state business conditions slipped to the lowest level in more than a year.

Industrial production rose 0.2% in August, matching economists' forecasts for a sharp slowdown from July when unusually strong auto manufacturing lifted output, Federal Reserve data showed. July's gain was revised down to 0.6% from 1%.

Some economists saw cause for optimism in higher readings on new orders and the average workweek however.

'We see this report as consistent with our view that manufacturing has downshifted to a lower pace of growth but not stagnated,' Barclays Capital economist Nicholas Tenev said.

In London the FTSE 100 dipped a little lower, down 27.5 to 5,539.9.

13.30

Despite bullish retail risers, overall the London market has failed to sparkle, the Footsie standing 11.2 points lower at 5,556.1.

Next shares climbed 98p to 2,138p, a leading 5% gain, after the group's profits rose by 15% in the six months to the end of July.

Utility firms' stocks were under pressure after Goldman Sachs reviewed its ratings for the sector. It left United Utilities 9.5p lower at 585.5p, while Scottish & Southern Energy dropped 22p to 1,157p.

In the second tier, power station Drax dropped 4% or 18.9p to 395p after JP Morgan Cazenove downgraded the stock following a recent rise in its share price.

BP shares fell 5.6p to 409.6p as it emerged that inspections on its North Sea installations found a number of them did not comply with guidelines over regular training for offshore operators on how to respond to an incident.

Other resources stocks were also lower, with Tullow Oil off 17p at 1,253p and Essar Energy down 5.9p at 458.1p.

In corporate results, construction firm Galliford Try lifted 3% or 8.25p to 301.75p after it reported a 56% rise in profits from its housebuilding division.

12.40:

AstraZeneca shares are down 49p or 1.4% to 3,336p on news that its new heart drug Brilinta's entry onto the US market will be delayed by at least three months.

Results of the review will now be published on December 16.

12.00:

The unemployment figures have provided a mixed picture on the economy, and investors have taken no firm stance from them it seems.

Mixed unemployment data saw the largest ever rise in the working population, but an ominous increase in the numbers claiming Job Seeker's Allowance. (Read more)

At noon, the FTSE 100 is 12.18 points lower at 5555.22.

We have more on the Next results, which have pushed retailers higher today.

09.45: The FTSE 100 struggled to extend gains today, with retailers pushing ahead after good results at Next, and investors awaiting unemployment data.

The Footsie fell on opening this morning but recovered to sit 3.09 points better off at 5570.50. Blue chips yesterday finished at their highest level since April.

Sentiment may be dictated this morning by unemployment data, due soon. Check later for updates.

Next shares jumped 4% today after the fashion chain sounded a note of defiance in its battle against a series of headwinds within the retail sector.

The group's profits rose by 15% in the six months to the end of July, while it stuck by earlier guidance that full-year figures will be up by at least 6%.

Despite continued uncertainty caused by rising cotton prices and January's VAT hike to 20%, Next shares were almost 4% higher, up 77p to 2117p.

The rise came during a lacklustre session for the wider market, with the FTSE 100 Index unchanged near its recent four-month high at 5567. This followed a quiet session on Wall Street and a slight fall for the Dow Jones Industrial Average.

Other retailers were cheered by the Next update as Marks & Spencer lifted 5p to 372p, B&Q owner Kingfisher gained 2.2p to 213.9p and Argos firm Home Retail Group added 1.8p to 214.2p.

Elsewhere in the sector, French Connection shares were 4% higher after its founder and chairman Stephen Marks said the brand was back on track after reporting half-year profits from businesses being retained in the wake of a restructuring. The stock lifted 2p to 47p.

Fallers included African Barrick Gold, falling 15p, or 2.4%, to 604p. Investors may be taking profit after a good run for the stock. The gold price hit a new high yesterday. (Read more.)

There were few clues coming from the spreadbetters on the propects for American shares. The Dow is seen opening only slightly higher – 8 points better at 10,471.