* FTSE 100 down 0.7 pct, FTSE 250 falls 2.1 pct
* DFS dives after profit warning
* Next's rating cut by Credit Suisse
* Mining stocks also weigh
(Adds details, closing prices)
By Kit Rees
LONDON, June 15 British mid-caps suffered their
worst one-day drop in nearly a year on Thursday as a sharp
slowdown in the country's retail sales last month offered the
latest sign of darkening clouds over companies exposed to the
Struggling retailers, weak commodities stocks and
ex-dividends also sent the blue-chip FTSE 100 index to
its lowest level in nearly a month, down 0.74 percent. The
mid-cap index fell 2.11 percent.
"If one of the indices is going to find things tougher, it's
likely to be the (FTSE) 250 rather than the 100," said Mike van
Dulken, head of research at Accendo Markets.
The slide in UK stocks worsened after the Bank of England
said that its Monetary Policy Committee had come the closest to
voting for an interest rate rise since 2007, with three of its
policymakers backing an increase.
The session was especially tricky for British retailers,
with furniture seller DFS plummeting by more than 20
percent after a profit warning, blaming a weaker trading
environment. Its shares suffered their worst day since listing.
Shares in mid-cap peer Howden Joinery nursed a 5.1
percent loss, while smaller ScS tumbled 8.1 percent.
The FTSE 350 general retailers index was down 3.9
"DFS believes that (like-for-like) sales could recover.
However, we take a more cautious view given rising inflation and
Brexit uncertainty," Jefferies analysts said in a note,
downgrading DFS to "hold".
A sharp fall in retail sales in May showed that British
retailers are facing a tough time as a jump in inflation and low
wage growth puts pressure on consumers, with a hung parliament
after the UK general election adding to political uncertainty.
Weakness in retail was also evidenced in the United States
in the previous session, when figures showed that U.S. consumer
prices fell unexpectedly in May.
Aside from falls in Persimmon and other stocks
trading ex-dividend, shares in clothes retailer Next
slid by 6.1 percent after Credit Suisse cut its rating to
"underperform", pointing to weak pricing across Europe for the
"With earnings, margins and cash conversion continuing to
fall, we regard Next as a value trap," Credit Suisse analysts
said in a note.
Falls in mining companies also weighed, as the price of
copper fell, set back by strength in the dollar after the U.S.
Federal Reserve raised interest rates.
The sector came further under pressure after South Africa
raised the minimum threshold for black ownership of mining
companies. Anglo American, which is headquartered in
both London and Johannesburg, fell 6 percent.
(Additional reporting by Danilo Masoni; Editing by Gareth