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Banks, miners drag London's FTSE 100; AB Foods jumps

FTSE 100 flat as banks offset surge in AB Foods
FTSE 100 flat as banks offset surge in AB Foods   -   Copyright  Thomson Reuters 2021
By Reuters

By Bansari Mayur Kamdar

-London’s FTSE 100 erased early gains to end lower on Tuesday, weighed by weakness in banks and mining stocks, while positive earnings outlook lifted shares of Primark owner AB Foods.

After rising as much as 0.19%, the FTSE 100 index ended 0.4% lower, as the banking sector fell 1.3%, with HSBC, Barclays and Lloyds all down about 1%.

Banks have come under pressure recently after the Bank of England kept interest rates unchanged last week, wrong-footing investors who were convinced it was about to become the first of the major central banks to raise rates, and banks that were expecting a rise in borrowing costs to boost their profitability.

On the bright side, AB Foods jumped 8.1% to the top of the blue-chip index after it forecast a significant increase in sales and profit at its Primark fashion chain in the new financial year and announced a special dividend.

“When restrictions ended, you had long queues for Primark just demonstrating how clever and how well loved the brand is,” said Danni Hewson, analyst at AJ Bell.

“AB Foods looks well positioned because they have such a diverse business empire, which has managed to hold up Primark when it was in a tricky phase during the pandemic.”

Rolls-Royce jumped 3.6% to over two-month high after Britain committed 210 million pounds ($283 million) to help it build the country’s first small modular nuclear reactor as part of its drive to reach net zero carbon emissions.

Meanwhile, miners including BHP Group, Anglo American and Glencore were down between 1.3% and 1.4% and among the top drags on the blue-chip index.

The domestically-focussed mid-cap index shed early gains to end 0.6% lower, weighed by homebuilders and travel and leisure stocks.

Homebuilders slipped 1.6% after Persimmon and Vistry Group Plc highlighted supply chain problems and said they expected building costs to rise, while also emphasising strong housing demand to back their outlook.