May 18, 2017 / 10:09 AM / 7 months ago

FTSE leads Europe-wide rush for the exits as Trump trade sours

(ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

* FTSE 100 down 1.3 pct

* Construction, mining stocks weigh

* Credit checker Experian drops on slower growth

* Retail sales strengthen pound, weigh on FTSE

* Berendsen skyrockets as rejects Elis takeover offer

By Helen Reid

LONDON, May 18 (Reuters) - British shares headed for their worst day in a month on Thursday, leading Europe-wide losses as political turmoil in the U.S. soured the “Trump trade” which has powered the FTSE to record highs.

A stronger sterling compounded losses on the mostly foreign-earning FTSE, down 1.2 percent by 0900 GMT, underperforming Europe’s STOXX 600.

The pound broke above $1.30 after retail sales beat forecasts, showing consumers in the UK are maintaining spending despite concerns about inflation pressures.

As the Trump trade unravelled, sectors that had gained the most on his election fell sharply. Construction equipment rental firm Ashtead and building materials firm CRH were among top fallers, down 4.3 and 2.7 percent.

Builders had been some of the top gainers after the election as investors bet on president Trump’s promised infrastructure spending.

Mining stocks also weighed with BHP Billiton, Anglo American, Antofagasta among biggest fallers, while investors rushed to the safety of utilities and consumer goods.

While investors said turmoil in the U.S. could spur further rotation from the American market into European and UK equities, the immediate fears sent the region’s shares tumbling.

“The sell-off we saw in the S&P 500 is being felt in a global ‘risk-off’ trade now rather than favouring any region over another, at least in the shorter term,” said Edward Park, director at Brooks Macdonald.

The world’s biggest credit card data company Experian fell 3.8 percent to the bottom of the FTSE after its full-year results showed slower growth in North America, while profitability and cashflow remained strong.

Hargreaves Lansdown fell 1.8 percent after a trading update which, though largely positive, was badly received by analysts at Liberum, who highlighted increasing pricing pressure from offerings such as Vanguard’s entering the market.

The fund supermarket saw assets jump 10 percent with increased market gains and inflows as more retail investors stashed savings into the new Lifetime ISA amid a global surge in equity markets.

Yet Liberum analysts maintained a ‘sell’ on the stock, saying Vanguard’s aggressively priced platform launched in the UK on Tuesday signalled increasing pressures on Hargreaves’ business model.

Luxury trench coat maker Burberry was a rare bright spot on the blue-chips, up 2.1 percent after its full-year results showing strong free cash flow rekindled investors’ hopes for the stock.

Profits were down 21 percent when the currency impact is stripped out, hit by weaker demand in the U.S.

But analysts saw a better-than-expected cash flow, higher dividend and new share buy-back as positive signs for the company.

“Despite all the difficulties of the last few years, cash flow has held up throughout,” said Steve Clayton, manager of the HL Select UK Shares fund.

M&A action brightened the picture on the mid-cap index. Laundry services group Berendsen surged 25 percent, set for its best day on record, after it rejected French rival Elis’s $2.6 billion offer, saying it undervalued the firm significantly.

The French firm’s latest approach was batted off as Berendsen said it did not see a basis for any further discussions with Elis.

Editing by Ed Osmond

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