London close: Stocks retreat further from record on weak US data, Greece

Stocks dropped sharply again on Wednesday as gloomy US economic data and ongoing uncertainty in Greece hammered sentiment.

London's FTSE 100 finished 1.2% lower at 6,946.28, with investors extra cautious ahead of a policy statement at the Federal Reserve after the close.

This was the second straight day of +1% losses for the Footsie as the index continued to pull back from the record closing high of 7,103.98 reached on Monday.

After a slow start, markets sank into the red in the afternoon as data revealed that the US economy barely expanded at the start of the year. US gross domestic product grew by an annualised 0.2% in the first quarter, compared with the 2.2% growth seen in the fourth quarter and the 1% growth expected by analysts.

The dollar immediately weakened following the report, sending the euro-dollar exchange rate to its highest since early March, driven further by data which showed the first rise in European bank lending for three years.

"The benefit to exporters of the weaker euro has been a large driver of higher European stocks, so signs that the euro is starting to recover has been a cue for many to take profits after the 20%+ gains seen this year," said analyst Jasper Lawler from CMC Markets UK.

Greece was also in focus for investors on reports that Athens will present a list of reforms to creditors on Wednesday. The draft bill is set to outline several reforms for legislation, but was believed not to include additional concessions from the ones already agreed with lenders.

The Federal Open Market Committee is due to announce its vote on monetary policy at 19:00 following a two-day meet-up in Washington, with markets awaiting hints on when the first interest rate increase will be.

Earnings come in mixed

Banking group Barclays declined after first-quarter results showed statutory group profits decreased 26% to £1.4bn. However, adjusted profits were up 9% over last year, while the lender’s capital buffers improved.

High street retailer Next was in fashion after first-quarter sales rose 3.2%, ahead of the 0% to +3% growth guidance given in March. More than half of the rise came from the opening of new space, with warmer weather and an earlier brochure also helping.

Industrial engineer Weir Group jumped after delivering a better-than-expected first quarter from minerals, its largest division. However, the company did say it was "taking further action to support profitability" in its oil and gas division amid tough conditions.

Antofagasta dropped as the copper miner scaled back its production guidance after first-quarter output was affected by numerous water issues at its Los Pelambres and Centinela projects.

British American Tobacco disappointed with a first-quarter update, which revealed that constant-currency revenues were down 5.8% amid a "challenging trading environment".

London Stock Exchange rose after saying it made a good start to the year with group revenues up 86% at £581m.

Homebuilders were weaker as speculation built ahead of the elections about growing support for Labour, which has promised to limit rent increases. Persimmon, Bellway, Redrow and Barratt Developments all finished in the red on concerns the move may stifle the demand for buy-to-let investments, analysts said.

Market Movers
techMARK 3,187.20 -1.13%
FTSE 100 6,946.28 -1.20%
FTSE 250 17,481.19 -1.01%

FTSE 100 - Risers
Weir Group (WEIR) 1,836.00p +5.64%
Next (NXT) 7,285.00p +1.67%
Royal Mail (RMG) 444.20p +1.51%
InterContinental Hotels Group (IHG) 2,844.00p +1.43%
Randgold Resources Ltd. (RRS) 5,095.00p +1.19%
Anglo American (AAL) 1,138.50p +0.84%
Sainsbury (J) (SBRY) 268.30p +0.83%
Travis Perkins (TPK) 2,076.00p +0.78%
Babcock International Group (BAB) 1,002.00p +0.70%
Hargreaves Lansdown (HL.) 1,231.00p +0.57%

FTSE 100 - Fallers
Hikma Pharmaceuticals (HIK) 2,042.00p -3.72%
CRH (CRH) 1,823.00p -3.65%
Dixons Carphone (DC.) 418.90p -3.03%
Carnival (CCL) 2,964.00p -3.01%
Unilever (ULVR) 2,846.00p -2.83%
Centrica (CNA) 267.60p -2.80%
GKN (GKN) 350.00p -2.75%
Imperial Tobacco Group (IMT) 3,172.00p -2.73%
Diageo (DGE) 1,796.50p -2.68%
ARM Holdings (ARM) 1,125.00p -2.68%

FTSE 250 - Risers
Brown (N.) Group (BWNG) 349.90p +8.73%
Greggs (GRG) 1,155.00p +7.34%
NMC Health (NMC) 710.50p +7.00%
Supergroup (SGP) 1,016.00p +2.99%
Hellermanntyton Group (HTY) 345.40p +2.80%
Kaz Minerals (KAZ) 257.40p +2.55%
Ocado Group (OCDO) 352.90p +1.96%
Centamin (DI) (CEY) 64.05p +1.91%
Lancashire Holdings Limited (LRE) 643.50p +1.66%
Saga (SAGA) 188.60p +0.91%

FTSE 250 - Fallers
Just Eat (JE.) 449.50p -6.55%
Ophir Energy (OPHR) 161.90p -5.27%
Alent (ALNT) 368.00p -3.79%
Renishaw (RSW) 2,479.00p -3.69%
AL Noor Hospitals Group (ANH) 885.00p -3.33%
Smith (DS) (SMDS) 345.70p -3.30%
Redrow (RDW) 365.10p -3.21%
Daejan Holdings (DJAN) 5,545.00p -3.06%
Fidelity European Values (FEV) 176.50p -2.92%
Synthomer (SYNT) 315.10p -2.90%