UPDATE 2-FTSE 100 ends worst session in nearly two-months; cigarette makers, oil stocks weigh

  • Reuters
  • Stock Market News
UPDATE 2-FTSE 100 ends worst session in nearly two-months; cigarette makers, oil stocks weigh
Credit: © Reuters.

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* BATS, Imperial Brands slump on nicotine cut fears

* Elementis drops after rejecting takeover bid

* AB Foods falls on a 50% drop in first-half profit

* FTSE 100 down 2.0%, FTSE 250 off 1.7% (Updates to close)

By Devik Jain and Shashank Nayar

April 20 (Reuters) - London's FTSE 100 ended lower on Tuesday, dragged down by stocks of heavyweight oil companies and cigarette makers, while Associated British Foods slipped after a downbeat first-half earnings update.

The blue-chip index .FTSE dropped 2%, the highest single day fall since Feb. 26, with tobacco firms British American Tobacco BATS.L and Imperial Brands IMB.L declining 7.6% and 7.3%, respectively, after a report said the United States was considering a rule to cut nicotine in all cigarettes sold in the country to levels at which they are no longer addictive. of AB Foods ABF.L fell 5.9% after it posted a 50% drop in first-half profit, hurt by COVID-19 lockdowns that shuttered its Primark fashion stores. seems somewhat of an overreaction given that this isn't a surprise and while the stores have been closed for a good part of the last 12 months, its other businesses have performed better than expected," said Michael Hewson, an analyst at CMC (NS: CMC ) Markets.

Sterling GBP= hit its highest in more than six weeks against the dollar, further weighing on the FTSE 100, many of whose constituents earn most of their revenues overseas and see their repatriated profits eroded by a stronger pound.

"While today's losses are quite large, they don't appear to be being driven by concerns over the economic outlook," said Hewson.

The domestically focussed mid-cap FTSE 250 index .FTMC fell 1.72%, with Elementis ELM.L reversing early gains to end 1% lower after it rejected a 160-pence per share takeover approach from the U.S. chemicals firm Innospec Inc IOSP.O .

Meanwhile, official figures showed Britain's unemployment rate unexpectedly fell to 4.9% in the December-February period, although tax data showed the number of employees on company payrolls fell by 56,000 between February and March, the first decline in four months. FTSE 100 index has gained 6.2% so far this year, but has underperformed its European peers during the period as a recent rise in Treasury yields and a jump in coronavirus infections across the globe weighed on sentiment.

Among other stocks, cyber security company Avast AVST.L jumped 1.3% after upbeat first-quarter trading update. ($1 = 0.7143 pounds)

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