By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. stocks fell Monday, with a ratings
downgrade for Burberry Group PLC putting the luxury retailer's
shares under pressure as the overall equity market declined.
The FTSE 100 was off 0.5% at 6,659.84, as bank, insurance and
oil issues fell. Leading decliners were Barratt Developments PLC ,
as the home builder gave up 3.4%, and investment manager Hargreaves
Lansdown PLC , which shed 2.6%.
U.K. stocks fell in line with other European and Asian shares,
tracking a selloff on Wall Street on Friday that was underpinned by
losses among so-called momentum stocks, such as biotechs and
Internet companies.
Echoing that trend, shares in microchip designer ARM Holdings
PLC fell 2.2% in London on Monday.
Also lower were Burberry shares , down by 1.5% after they were
downgraded to hold from buy at Berenberg. Currency headwinds
persist for euro-, pound- and Swiss franc-denominated luxury,
sporting goods and eyewear makers, Berenberg analysts John Guy and
Bassel Choughari said in a note Monday. Assuming no change to
current levels, "the second half of 2014 ought to provide some
respite. However hedged, the translational impact is likely to
weigh on earnings over the short term," they said.
U.K. stocks on Friday had finished higher, leaving the FTSE 100
with a third consecutive week of gains. But U.S. stocks stumbled
after trading in Europe closed, pushing the Nasdaq Composite (RIXF)
to its worst drop in two months.
One of the surprises for Friday's market action in the U.S. was
that stocks fell "despite the pared-back expectations for U.S.
rates, which would usually be bullish for the market," said
Marshall Gittler, head of global FX strategy at IronFX, to clients
on Monday. "The rout was centered in small-cap stocks and some high
PE stocks, which hedge funds had apparently been buying with little
success," he said.
"This could be a bad omen for stocks -- until recently, the
mantra in the stock markets has been "buy the dips," but the usual
logic didn't work this time in the Nasdaq which closed below its
100-day moving average for the first time since Dec. 2012."
The U.S. corporate earnings season unofficially kicks off this
week.
But risk appetite among chief financial officers of major U.K.
companies was at its highest level in six years in the first
quarter, with a Deloitte survey released Monday showing 71% of CFOs
polled said now is a good time to take on more risk.
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