* FTSE 100 reverses to close 0.4 pct down
* FTSE 250 up 0.6 pct
* Housebuilders extend gains after Brexit report and BAML upgrade
* Airline Flybe slides after 1p-per-share buyout offer
* Retailer Quiz tanks after revenue warning
(Adds analyst comments, closing prices)
By Muvija M
Jan 11 (Reuters) - British blue-chip shares retreated on Friday,
singed by a sterling rally on a newspaper report of cabinet ministers
saying that Britain would have to delay its European Union exit.
The report in the Evening Standard pushed sterling up against the
dollar and euro, dragging the exporter-heavy FTSE 100 off earlier
highs and down 0.4 percent. But the currency fell back after a
spokeswoman for British Prime Minister Theresa May ruled out any delay.
Companies that earn mainly U.S. dollars are hit by a stronger
pound and were the among the biggest drags on the index. AstraZeneca
fell 3.6 percent, while HSBC and GlaxoSmithKline also fell.
But weakness in oil majors BP and Shell on lower crude
prices made the sector the biggest drag on the FTSE 100.
The Evening Standard cited unnamed cabinet ministers as saying
Brexit looks increasingly likely to be delayed beyond March 29 because
of the backlog of legislation that needs to be passed.
Stocks had been boosted earlier by reassurance from U.S. Federal
Reserve Chairman Jerome Powell on the pace of further increases to
interest rates, with progress in U.S.-China trade talks also providing
Mid-caps, which make half of their income at home, rose 0.6
percent to their highest in more than a month.
David Madden, CMC Markets analyst, said any Brexit delay might
provide a short-term bounce for the pound but emphasised that the
outlook remains highly uncertain.
"All the various options, be it Theresa May’s plan, a second
referendum, or leaving the EU without a deal – they all seem to be
almost equally unpopular,” he said.
British homebuilders sensitive to Brexit news, extended early
gains to trade up 2.1 percent as the sector index
registered its biggest weekly gain in nearly three years, helped by
Bank of America Merrill Lynch upgrading the UK housebuilding sector to neutral.
Taylor Wimpey jumped 4.8 percent to top the FTSE 100 leader
board, with Persimmon and Barratt Developments
up 4.4 and 2.9 percent respectively.
Adding to worries at home, however, official data showed that
Britain's economic growth hit a six-month low in the three months to
November as factories suffered from tough global trade conditions
ahead of Brexit.
Airline Flybe plummeted 77.1 percent to a record low of 3.8
pence after a heavily discounted 1 pence-per-share buyout offer from a
consortium of Virgin Atlantic, Stobart
Stobart jumped 7.2 percent after the news to top the mid-cap winners.
Retailers continued to upset the markets, with AIM-listed
fast-fashion retailer Quiz tanking 32.5 percent to a record low
after a revenue warning following disappointing Christmas sales.
Suits specialist Moss Bros also said the period ahead would be
"extremely challenging", but its shares firmed as analysts
took comfort from strong e-commerce sales.
Debenhams plunged 18.8 percent in high-volume trading.
Investors had forced the department store group's CEO off the board
and the chairman out of the company on Thursday after another plunge
UDG Healthcare slumped 7.7 percent to be the biggest mid-cap
faller after Jefferies downgraded the stock and said the healthcare
services provider's preliminary expectation for the year "does
not sound attractive".
(Reporting by Muvija M Additional reporting by Pushkala Aripaka in
Bengaluru Editing by Raissa Kasolowsky and David Goodman)
((Muvija.M@thomsonreuters.com; within U.S. +1 646 223 8780, outside
U.S. +91 80 6749 3638; Reuters Messaging: email@example.com))
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