* FTSE 100 index down 0.5 percent
* Consumer goods firms fall on rising manufacturing costs
* Energy shares supported by crude oil
(Follow European and UK stock markets in real time on the
Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)
By Peter Hobson and Atul Prakash
LONDON, Dec 1 Britain's top equity index slid on
Thursday, pulled down by more evidence of the weak pound
damaging consumer goods companies and by some stocks trading
without rights to their latest dividend payouts.
The blue-chip FTSE 100 index was down 0.5 percent,
its lowest close since Nov. 17. The benchmark index is still up
8 percent so far in 2016.
Consumer stocks suffered after the Markit/CIPS UK
Manufacturing Purchasing Managers' Index (PMI) showed prices
paid by factories for materials and energy had shot up in
November at a rate just shy of October's near six-year high, due
to the slump in the value of sterling after Britain voted to
leave the European Union.
"The concern is firms will eat the higher costs, at the
expense of profits, to offer competitive prices over Christmas,"
said Jasper Lawler, an analyst at CMC Markets.
Coca Cola HBC and Unilever were among the
biggest fallers, down 3.9 percent and 3.1 percent respectively.
The index also came under pressure from several stocks that
traded without rights to their latest dividends.
Water utility Severn Trent fell 3.4 percent, while
Land Securities slipped 3.2 percent and British
Airways-owner IAG was down 2.6 percent.
A constitutional reform vote in Italy also kept investors
cautious. Prime Minister Matteo Renzi has said he would resign
if he loses the referendum, opening up policy uncertainty.
"Sentiment is neutral - however, there might still be some
position squaring to take place ahead of Sunday's Italian
referendum," said Markus Huber, a trader at City of London
Electronics retailer Dixons Carphone rose 3.8 percent after
upbeat assessments from analysts at Credit Suisse and UBS.
Energy stocks also rose as crude oil prices soared 5 percent
to trade around $54.40 per barrel, extending the gains that
followed Wednesday's deal by OPEC and Russia to curb a global
The UK oil and gas index hit a one-month high
and finished 2.5 percent higher, helped by a 2.3 to 5.9 percent
rise in shares of BP, Royal Dutch Shell and
However, "filtering the knee-jerk reaction, we have doubts
about the mid-term potential in the oil recovery," said Ipek
Ozkardeskaya, senior analyst at London Capital Group.
"A supply-induced recovery will face two major issues.
First, the oil recovery will certainly hit the barrier of low
global demand before it reaches the $55 level. Second, the
higher prices will inevitably bring in new international
(Reporting by Atul Prakash and Peter Hobson; Editing by Ruth