By Carla Mozee, MarketWatch
Retail sales rise as prices decline
LONDON (MarketWatch) -- U.K. stocks fell by the most in two
weeks Thursday, with a selloff in global markets overshadowing U.K.
retail sales data that outstripped expectations.
The FTSE 100 benchmark fell 1.3% to 6,899.46, heading toward a
third session of losses. Equities in the broader European market
tumbled as well, following sharp declines overnight on Wall
Street.
Only eight of the FTSE 100's components advanced, and none of
the sectors tracked in London moved higher. The hardest hit stock
was London Stock Exchange Group . Its shares slid 8.2% after the
company's biggest shareholder, Borse Dubai, sold its entire 17.4%
stake in the exchange operator.
Retail sales: A record decline in prices at stores helped
bolster spending in the U.K. last month. The volume sold by British
retailers rose 0.7%
(http://www.marketwatch.com/story/record-fall-in-prices-boosts-uk-retail-sales-2015-03-26)
in February from January, the Office for National Statistics said
Thursday. The rate was better than the 0.4% increased expected in a
FactSet poll of analysts. Sales on a year-over-year basis climbed
5.7%.
But "with the current trading climate the way it is, this good
news couldn't make a dent in the FTSE's precipitous losses, with
that record-breaking 7,000 level receding further into the
background," said Connor Campbell, financial analyst at SpreadEx,
in a note.
The pound (GBPUSD) had traded around $1.4964 ahead of the
report, but eventually pulled back to $1.4901. It was still
slightly higher than late Tuesday's level of $1.4883.
For sterling, "sentiment is checked by uncertainty surrounding
the May election and ideas that a [Bank of England] rate hike is
still more than a year away," wrote analysts at BBH Global
Currency.
Pullback: The heavily weighted energy group posted the smallest
loss among London-tracked sectors as oil prices rallied
(http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26)(CLK5)
after reports of Saudi Arabian airstrikes in Yemen raised concerns
about supply disruptions. Oil major BP PLC slipped fractionally, BG
Group PLC swung 0.8% lower, but energy-engineering firm Weir Group
PLC rose 0.9%.
Along with the situation in Yemen, stock markets are being
pulled lower by investors booking gains "following the recent
central-bank-inspired rally," wrote Fawad Razaqzada, technical
analyst at Forex.com. Funds from the European Central Bank's
asset-purchase program have made their way into U.K. equities,
pushing the FTSE 100 to record highs this year.
With highly accommodative monetary policy stances still intact
at the European Central Bank and the U.S. Federal Reserve,
"yield-seeking investors may still be looking for opportunities in
the stock markets after every notable pullback. This trend is
likely to remains in place for the foreseeable future, especially
in Europe," Razaqzada said, adding that it may "be wise to wait for
the dust to settle before also turning bullish in the short
term."
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