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FTSE 100 lower on Apple-induced growth worries

Next jumps after ‘respectable’ Christmas update

By Reuters - Jan 03,2019 - Last updated at Jan 03,2019

Shoppers walk past a Next store on Oxford Street in London, Britain, on December 17, 2018 (Reuters file photo)

A rare revenue warning from smartphone giant Apple triggered a new wave of selling in UK shares on Thursday as investors' fears of slowing global growth were confirmed though fashion retailer Next provided some post-festive cheer. 

Britain's FTSE 100 edged 0.5 per cent lower and FTSE 250 was down 0.1 by 10:13 GMT, outperforming European peers thanks to a strong Christmas update by Next which helped sentiment.

Trading volume for FTSE 100 remained low; just 13 per cent of the 90-day average daily turnover changed hands in the first two hours after the opening bell.

In a first in more than a decade, Apple on Wednesday cut its quarterly sales target with Chief Executive  Officer Tim Cook blaming weak iPhone sales in China and consumers upgrading their iPhones at a slower pace.

Investors reacted by dumping stocks sensitive to China, the world's second-largest economy, and to the economy and took refuge in gold, seen as a safe haven.

Concerns over economic growth in top metals consumer China sent Rio Tinto, BHP, Glencore and Antofagasta down 0.9 to 2.2 per cent in early deals but a six-month high in gold boosted miner Fresnillo 2.6 per cent higher. 

Luxury brand Burberry, sensitive to signs of slowing demand in China, lost 3.6 per cent to join the top fallers.

A bright spot helping keep a lid on negative sentiment was high street clothing retailer Next, which jumped 5.1 per cent on track for its best day in more than three months after reporting higher sales in the run-up to Christmas, allaying fears of poor festive trading. 

"November was indeed difficult for Next as well, but Christmas did arrive ultimately, with the last three weeks of December being very strong in sales terms," said Peel Hunt analysts, while Investec called it a respectable trading update.

Next's encouraging update also helped shares in Marks & Spencer, Tesco and Primark-owner Associated British Foods rise 2 to 2.4 per cent, among top blue-chip winners.

Prominent mid-cap retailers, including Superdry, Dunelm, also got a boost. AIM-listed ASOS was up 5.5 per cent, also boosted by Peel Hunt reinstating a "buy" rating on the online fashion store a month after its profit alert shook the global retail scene.

Still, investors continued to fret about the US-China trade spat, a slowdown in the global economy, Brexit uncertainties, plunging oil prices — to name a few.

Data showing growth in Britain's construction sector fell to a three-month low in December did little to help the mood, highlighting delays in commercial projects due to Brexit.

Bank and information technology shares were among the top drags on the mid-cap index, while low-cost airline Wizz Air climbed 2 per cent after reporting December traffic statistics.

Among small-caps, drugmaker Vectura soared 10.5 per cent to lead the gainers after a positive trading update and AIM-listed Faroe Petroleum rose 5 per cent after DNO's takeover offer became mandatory.

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