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* FTSE 100 flat
* Next shares tank after profit warning
* Housebuilders find support from note
By Kit Rees
LONDON, Jan 4 Britain's top share index traded
flat on Wednesday, edging down from a record high hit in the
previous session as shares in Next slumped after the
retailer issued a profit warning.
The blue chip FTSE 100 index was flat in percentage
terms at 7,175.72 points by 0945 GMT, having hit an all-time
high of 7,205.45 points on Tuesday.
Next tumbled 9.5 percent to hit a two-month low
after the retailer cut profit guidance for its current financial
year and warned on the outlook for the next, highlighting
"exceptional" levels of uncertainty in the sector.
In its Christmas trading update, Next said its central
guidance for its year to Jan. 2017 was for pretax profit of 792
million pounds ($971 million), down from the 805 million pounds
it had previously forecast.
"Next has been a market darling for a long time thanks to
its highly rated management team and consistent delivery of high
operating margins and surplus cash, whatever the macro
environment," analysts at Jefferies said in a note.
"Yet with earnings now confirmed to fall for a second year,
it does feel as though this time Next has few levers left to
Shares in peers Marks & Spencer and Primark-owner
Associated British Foods also tumbled 5 percent and 3.6
percent respectively. Mid cap Debenhams was down 4.9
There was a silver lining for the British retail sector,
however, as mid cap B&M jumped 6.6 percent following
its quarterly update.
The British discount store chain said that a record
Christmas drove a strong third quarter, helping UK like-for-like
sales rise 7.2 percent.
"Given a lot of investor sentiment has focused on the
weaker-than-expected LFL, this should provide some relief over
the sustainability of the sales growth," analysts at UBS said in
British housebuilders were also stronger on Wednesday, with
Barratt Developments, Taylor Wimpey and
Persimmon rising between 1.4 percent to 2.5 percent,
helped by a positive note on the sector from Deutsche Bank.
Deutsche Bank said that they saw close to 30 percent upside
across the housebuilding sector as a whole. Housebuilders
lost more than 20 percent in 2016.
"After a tumultuous 2016, we see appealing value in the UK
Housebuilder sector. While investor appetite for UK focused
stocks remains more moderated reflecting Brexit risk, we see
dividend yield as difficult to ignore," analysts at Deutsche
Bank said in a note.
(Editing by Catherine Evans)