London stocks slip as virus risks exceed expectations

British shares slipped on Tuesday as worries about increasing cases of COVID-19 and its impact on the economy overshadowed upbeat earnings forecasts, while retailer Kingfisher (LON:KGF) jumped to the top of the FTSE 100 after reporting strong sales.

The blue-chip FTSE 100 index dipped 0.1%, with pharmaceutical stocks falling the most. Drugmaker AstraZeneca was the top drag on the index.

Finance Minister Rishi Sunak warned on Monday that Britain’s economy would get worse before it got better, with the country now in its third national lockdown to contain the spread of the novel coronavirus.

“What we are seeing is some caution setting in among traders and we expect little more consolidation ahead of the earnings season,” said the analyst Michael Hewson.

“However, the broader positive sentiment remains intact with most traders betting that conditions will get better sooner or later.”

The export-heavy FTSE 100 has gained nearly 38% from its March 2020 lows as record government spending and optimism around vaccine rollouts have helped it climb back to levels seen in February 2020, before the coronavirus crisis hammered risk assets globally.

In a set of positive earnings updates, home improvement retailer Kingfisher rose 2.8% after reporting strong trade across its markets, with fourth-quarter to Jan. 9 underlying sales rising 16.9%.

E-commerce retailer The Hut Group gained 3.1% after it raised its 2021 revenue forecast by 10%, underpinned by the acquisition of Dermstore.com and a surge in online demand for its beauty products.

Gambling software maker Playtech (LON:PTEC) jumped 5.4% after saying it saw 2020 annual performance to be ahead of expectations, driven by its financial trading arm, and casino, poker, bingo and betting businesses.

However, British consumer spending fell in December at the fastest rate in six months, with pubs and restaurants especially hard hit by a resurgence of coronavirus cases, a survey showed.

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