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Retail shares hit by Next outlook FTSE rises ahead of Fed message
(about 3 hours later)
(Open): The FTSE rose in early trade but retail stocks were hit after Next lowered its profits guidance. (Noon): The London market saw healthy gains on hopes that the US Federal Reserve will indicate later that it is in no hurry to increase interest rates.
Shares in Next dropped 2.4%, the biggest faller on the FTSE 100. The milder-than-usual weather over the past couple of months has hit demand for winter clothes. The FTSE 100 index was up 48.14 points at 6,450.31 in lunchtime trade.
The Fed is expected to confirm that it will end its policy of quantitative easing, but analysts do not expect any rate rises until well into next year.
"It is the commitment to low interest rates that is maintaining calm," said Brenda Kelly, market strategist at IG.
"Expectations are for a dovish Fed decision that will assuage fears about a premature rate hike."
Shares in Next dropped 0.7% after it cut its full-year profit guidance. The milder-than-usual weather over the past couple of months has hit demand for winter clothes.
It now expects full-year profits of £750m-£790m, down from its previous guidance of £775m-£815m.It now expects full-year profits of £750m-£790m, down from its previous guidance of £775m-£815m.
M&S shares fell 1.5% and Primark owner AB Foods dropped 1.1%. Other clothing retailers were hit by the news, with Marks and Spencer shares down 0.6% and Supergroup - the firm behind the Superdry brand - dropping 3.4%.
Overall, the FTSE 100 index was up 27.79 points at 6,429.96. European markets tracked gains in Asia overnight which were driven by hopes that the US Federal Reserve will indicate later that it is in no hurry to raise interest rates. Shares in TUI Travel rose 1.7%. On Tuesday, TUI Travel and German company TUI AG approved the plan for the two to merge.
Shares in TUI Travel were the top risers on the index, rising 3.9%. On Tuesday, TUI Travel and German company TUI AG approved the plan for the two to merge. On the currency markets, the pound fell 0.1% against the dollar to $1.6116 and was also 0.1% lower against the euro at €1.2658.
On the currency markets, the pound dipped 0.03% against the dollar to $1.6126 and was unchanged against the euro at €1.2671.