* FTSE 100 steadies at the close
* Next tanks after profit warning
* Housebuilders find support
(Updates at market close)
By Helen Reid and Kit Rees
LONDON, Jan 4 Britain's top share index closed
slightly firmer and near a record high on Wednesday as a rally
in housebuilders was offset by a slump in retailers after Next
issued a profit warning.
The bluechip FTSE 100 index closed 0.17 percent
higher at 7,189.74 points, having touched an all-time high of
7,205.45 in the previous session.
Next hit a two-month low and closed 14.4 percent weaker
after the retailer cut its profit guidance for the current
financial year and warned on the outlook, highlighting
"exceptional" levels of uncertainty in the sector.
In its Christmas trading update, Next said its central
guidance for the year to January 2017 was for pretax profit of
792 million pounds ($971 million), down from the 805 million
pounds it had previously forecast. It also said it expected
prices to rise by 5 percent on the pound's plunge after Brexit.
"The fundamental issue is that you've seen a nearly 20
percent trade-weighted depreciation of sterling over the last 12
months," said Jeremy Lawson, chief economist at Standard Life
"In a sector that imports a very large proportion of the
underlying product, that significantly increases the costs in
the supply chain."
Peers Marks & Spencer and Primark owner Associated
British Foods dropped 6.1 percent and 3.7 percent
respectively, while mid-cap Debenhams fell 6.6 percent.
There was a silver lining for the retail sector, however, as
mid-cap B&M jumped 9.5 percent after the discount store
chain said a record Christmas drove a strong third quarter.
Housebuilders were on a strong footing, with Barratt
Developments, Taylor Wimpey and Persimmon
rising between 2.8 percent and 4.1 percent, helped by
mortgage approvals in November reaching an eight-month high,
indicating a post-Brexit recovery.
A positive note from Deutsche Bank also helped the sector.
The bank said it 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
Taylor Wimpey and Barratt Development have trading updates
on Jan. 11 and 12 respectively.
(Editing by Mark Trevelyan)