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* STOXX Europe 600 closes 0.1 percent lower
* Next shares sink after profit warning
* Credit Suisse leads banks higher
By Atul Prakash and Alistair Smout
LONDON, Jan 4 European shares edged down from a
one-year high on Wednesday, with retailers in focus after
standout faller Next cut its profit guidance and
cautioned on future trade.
The pan-European STOXX 600 closed 0.1 percent
lower, pulling back from its highest level since December 2015,
reached in the previous session.
The index was dragged down by a 14.4 percent slump in shares
of UK fashion retailer Next, making it the biggest percentage
faller on the STOXX 600. The stock has lost nearly 40 percent
over the past year.
Next's warning put pressure on other high street retailers
with UK exposure. Marks & Spencer slumped 6.1 percent
and Primark-owner Associated British Foods fell 3.7
percent. The STOXX 600 retail index was down 1 percent,
the biggest sectoral faller.
"We are already seeing signs of inflation picking up as
import prices rise in the wake of sterling's fall," said Stephen
Macklow-Smith, head of European equity strategy at JPMorgan
"Retailers are likely to respond with price competition,
which is likely to put pressure on their margins ... The only
question is how much of this is already in the price, given that
retailers have underperformed since late 2015. My sense is that
further pressure on real incomes is not yet fully discounted."
The exception was B&M. The value retailer was the
top STOXX 600 riser, up 9.5 percent after reporting record
The STOXX 600 is up nearly 12 percent in the seven weeks
since lows hit following the U.S. presidential election, as
investors bet that global growth and inflation will rise under
President-elect Donald Trump.
Euro zone services PMIs provided further evidence of
economic strength, as businesses ended 2016 by ramping up
activity at the fastest pace for five-and-a-half years.
In financials, Credit Suisse rose 3.5 percent
following a positive sector note by Barclays. European banks
rose 0.6 percent, the top sectoral riser.
"The calendar of political events remains full, and economic
variables open to a wide range of outcomes, whose ebbs and flows
should stimulate trading further in 2017, giving upside to
investment bank revenues," Barclays analysts said in a note.
UK-listed housebuilders were also among top sectoral
gainers, after Deutsche Bank said there was close to 30 percent
upside in the sector.
Shares in Barratt Developments, Taylor Wimpey
and Persimmon rose between 2.8 percent and 4.1
percent, also helped by UK mortgage approvals in November
reaching an eight-month high, indicating a post-Brexit recovery.
French pharma firm Ipsen hit a record high after
Natixis upgraded the stock to "buy" from "hold". It closed 3
(Editing by Dominic Evans)