LONDON MARKET OPEN: Miners And Next Lead FTSE 100 Fallers

LONDON (Alliance News) - Mining stocks dragged on London equity indices Thursday, but it was fashion retailer Next that led the blue-chip fallers after it gave a cautious outlook for 2016.

Next reported growth in profit in its recently ended financial year, as it grew sales in both the directory and retail businesses, but noted that 2016 will be a challenging year due to an uncertain global economic environment.

The fashion and homewares retailer said pretax profit in the year to January grew to GBP836.1 million from GBP794.8 million the year before, as revenue rose to GBP4.18 billion from GBP4.0 billion. Next will pay a total dividend of 158 pence for the year, which is a 5% increase on the prior year.

"2016 will be a challenging year with much uncertainty in the global economy. For Next it makes it particularly important that we remain focused on our core strategy of delivering long term sustainable growth in earnings per share, investing in the business, improving the design and quality of our products and returning surplus cash to shareholders," Chairman John Barton said in a statement.

The stock was down 9.0% after the opening bell on the London Stock Exchange.

The FTSE 100 was down 1.0%, or 63.05 points, at 6,136.06 just after the open.

The FTSE 250 was down 0.7% at 16,754.40 and the AIM All-Share was down 0.1% at 709.53. In Europe, the French CAC 40 was down 1.1% and the German DAX 30 was down 0.9%

In Asia Thursday, the Japanese Nikkei 225 index closed down 0.6%, the Shanghai Composite ended down 1.6% and the Hang Seng index fell 1.3%.

Miners were amongst the worst performers in the FTSE 100, with Anglo American down 5.5%, Rio Tinto, down 3.3% and Glencore down 3.1%.

The companies were feeling the effect of lower commodity prices, which were hit by the stronger dollar. The dollar gained support over the week after a series of hawkish speeches from US Federal Reserve members put more emphasis on a US interest rate increase in April.

In the FTSE 250, engineer Renishaw Group was the worst performer, down 12% after it trimmed its profit and revenue guidance for its financial year to the end of June due to weaker trading conditions in the second half.

The company, which makes a range of precision measurement, 3D laser scanning and healthcare products, has consistently warned profit and revenue for the current financial year would fall against the prior year owing to large one-off orders not repeating.

On Thursday, however, Renishaw said trading conditions have weakened in the second half, leaving it now expecting pretax profit of GBP67.0 million to GBP83.0 million for the full year, down from its previous guidance of GBP85.0 million to GBP105.0 million.

It also cut its revenue guidance for the second time this year, down to GBP420.0 million to GBP440.0 million from GBP440.0 million to GBP465.0 million previously.

Mitie Group was also a heavy mid-cap faller, down 8.7% after the outsourcer said profit for the full year will meet market expectations, but revenue will fall short following a softer second half.

Mitie said it has seen some revenue shortfalls emerge in the second half of the financial year to the end of March, meaning revenue will miss market expectations. The company has been cutting costs to preserve margins, which will mean profit will be "within the range" of current market expectations, it said.

Premier Foods was down 10%, after seeing its share price rise 71% on Wednesday when it disclosed two takeover approaches had been made by US spices and herbs manufacturer McCormick & Co, though both were rebuffed.

On Thursday, the food producer said Nissin Foods Holdings Co will buy a 17% stake in Premier from an existing shareholder for an undisclosed amount. Based on Premier's current market capitalisation, the stake is worth around GBP68.8 million.

The news comes after Premier Foods, which makes Bisto gravy and Mr Kipling cakes, said on Wednesday it has entered into a cooperation agreement with Nissin, which invented instant noodles in 1958.

Still ahead in the economic calendar, the European Central Bank's monthly economic bulletin is at 0900 GMT, and UK retail sales and mortgage approvals are both at 0930 GMT. Later in the day are US continuing and initial jobless claims and durable goods data at 1230 GMT, the Kansas Federal Reserve's manufacturing activity at 1500 GMT and the Baker Hughes US oil rig count at 1700 GMT.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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