Marks & Spencer Share News (MKS)

LONDON (Alliance News) - UK shares ended lower Tuesday, pressured by weak US economic data, with clothing retailers among the worst performing stocks in London after Next warned that it was being hurt by the current unseasonably warm, dry weather.

The FTSE 100 closed down 0.4% at 6,622.72, and the FTSE 250 ended 0.1% lower at 15,379.72. The AIM All-Share, however, closed up 0.1% at 750.08.

London turned lower when it looked likely the US markets would open down. The weak data then pushed the FTSE 100 further down, before the losses were pared late in the session when US markets recovered.

At the close of European trade, the US equity markets had moved into positive territory, with the DJIA up 0.4%, the S&P 500 up 0.3%, and the Nasdaq Composite up 0.3%.

Chicago-area manufacturing activity continued its expansion, but at a slower pace, according to a report from the Institute for Supply Management, Chicago. The Chicago purchasing managers' index decreased 3.8 points to 60.5 in September, falling slightly short of expectations for a reading of 62. The reading was also considerably lower than the previous month's print of 64.3.

US consumer confidence fell from a seven-year high amid concerns about the outlook for employment, the Conference Board reported. After rising four consecutive months, the Conference Board's consumer confidence index declined to 86.0 in September, down from an upwardly revised reading of 93.4 in August. Economists expected the index to edge up to 92.5, against the initial August reading of 92.4.

According to the report, consumers expressed anxiety over the health of the jobs market after the economy generated less than 150,000 jobs in August. The present situation index decreased to 89.4 from 93.9, while the expectations index dropped to 83.7 from 93.1 in August. Meanwhile, the percentage of consumers expecting business conditions to improve over the next six months fell from 20.8% to 18.6%, while those expecting business conditions to worsen rose from 9.9% to 12.0%.

European stock markets also outperformed London, amid low inflation data from the eurozone. The CAC 40 ended the day 1.6% higher and the DAX ended up 0.7%.

Eurozone inflation slowed in September to the lowest since late 2009, which could pressure the European Central Bank to ease monetary policy further. Inflation came in at 0.3%, slower than August's 0.4%. This was the lowest since October 2009, when prices fell 0.1%. Core inflation, which excludes energy, food, alcohol and tobacco, eased to 0.7% in September, while it was forecast to remain unchanged at 0.9%.

"The low September CPI data vindicates the ECB's easing steps announced last month. Following the cut on 4 September, ECB rates have bottomed and are likely to stay at current levels (refi at 0.05%) for a long time. We believe the ECB's asset-backed securities and covered bond programme reduces the likelihood of full-scale sovereign quantitative easing, at least over the coming quarters. In fact, full QE is not our base case scenario," said UBS economist Reinhard Cluse.

The euro declined to its lowest level against the dollar in two years on the back of the numbers, hitting a low of USD1.269 in intraday trade.

Next was the worst-performing stock in the FTSE 100, declining 3.8%. Next said the cooler weather in August resulted in some strong weeks, but the warmer weather conditions since have had the opposite effect. It said its third quarter sales to date are up 6% year-on-year, below its previous guidance of 10% growth. The company added that if the unusually warm weather seen in the UK continues throughout October, the group will have to lower its current full-year profit guidance of GBP775 million to GBP815 million.

The update caused a sell off in other clothing stocks, with Marks and Spencer Group ending down 2.6%, Sports Direct International down 2.4%, and Debenhams down 2.5%.

Royal Bank of Scotland Group shares ended the day 1.9% higher after it said it expects to "significantly outperform" its previous impairment guidance for the full year, supported by an improvement in economic conditions and asset prices in its key markets, including Ireland, though it issued a warning on third-quarter corporate and institutional banking revenue.

RBS had previously guided about GBP1.0 billion in total impairments for the full year, but gave no specific new guidance. The group said the improved economic climate supported a strong operating performance by RBS Capital Resolution (RCR), the 'bad bank' it set up to run down capital intensive assets. RBS said it expects RCR to record net impairment provision releases in the region of GBP500.0 million in the third quarter. However, the company warned that RCR's future overall costs and speed of wind-down remain subject to significant potential volatility.

Intertek Group's appointment of André Lacroix as Chief Executive with effect from May 16, 2015 sent its shares higher. Lacroix succeeds Wolfhart Hauser, who will step down from the board and retire on May 15 after ten years as CEO. Intertek said Hauser will remain available to support Lacroix as required until the end of December 2015. The incoming Chief Executive joins from FTSE 250-listed Inchcape, where he has served as group CEO for nearly 10 years.

Intertek ended the day as one of the biggest gainers in the FTSE 100, closing up 2.1%, while Inchcape was one of the biggest fallers in the mid-cap index, closing 4% lower.

The Hang Seng and the Shanghai Composite will be closed on Wednesday to celebrate China's National Day. However, markets will get the chance to react to Chinese NBS manufacturing PMI for September, which will be released at 0100 BST.

The morning's economic releases are dominated by Markit manufacturing PMI results for September from a host of European countries, the eurozone as a whole at 0900 BST and the UK at 0930 BST.

US data will fill the rest of the day with ISM manufacturing PMI for September being the highlight at 1500 BST.

In the corporate calendar, FTSE 100 supermarket chain J Sainsbury will be releasing a trading statement, as will ITE Group. AIM-listed companies James Halstead and Avingtrans will be reporting full-year results.

By Neil Thakrar; neilthakrar@alliancenews.com

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