* FTSE 100 down 0.9 pct
* Emerging-market turmoil triggers 4 percent monthly fall
* Diageo, SABMiller hit by analyst downgrades
* BT top riser as it returns to revenue growth
By Alistair Smout
LONDON, Jan 31 British blue chip shares fell to
six-week lows on Friday and were set for their worst month since
June, as beverage stocks suffered from emerging-market turmoil
and disappointing results.
The FTSE 100 was down 60.46 points, or 0.9 percent,
to 6,477.99 points by 1556 GMT. It was set for a 4 percent drop
for the month of January, its biggest monthly decline since last
June and its worst January since 2009.
After an encouraging start to the year, which saw the UK
benchmark post gains in the first two weeks, equity markets took
a turn for the worse, as unease about slower Chinese growth and
the withdrawal of U.S. monetary stimulus spread from
emerging-market currencies to the world's big stock markets.
The index hit six-week lows on Friday, after dropping around
5 percent over the last six days, as further turbulence in
emerging markets sent world shares to their worst month in two
"It did look like we could see some stabilisation at one
point this week, but it looks like the emerging-market turmoil
is still there ... so the path of least resistance on the FTSE
remains to the downside into February," said Fawad Razaqzada, a
market strategist at Gain Capital.
"It's based on fear, so it's hard to predict how long it
will last, but the fact that the Fed is unwinding its stimulus
at the same time is prompting investors to retreat from the
stock market at this time."
All sectors bar telecoms posted losses. Growth-sensitive
companies such as financials and miners were hit by worries over
global growth. More defensive sectors, such as beverage
companies, suffered because of their emerging-market exposure.
Aberdeen Asset Management fell 3 percent, leaving the
emerging-market-exposed fund manager down 22 percent for the
Diageo fell after various investment houses, among
them Goldman Sachs, weighed in on the world's biggest spirits
firm. Its 1.1 percent drop extended a 4.7 percent plunge on
Thursday after the company said its revenues were hurt by
weakness in emerging markets.
Goldman Sachs removed Diageo from its Conviction List and
downgraded its rating on the stock to "neutral". The investment
firm said a weak Diageo performance in the first half would
probably persist into the second half of 2014, and emerging-
market challenges would continue into next year.
"Goldman Sachs haven't done Diageo any favours. Everything
depends on how long this emerging-market crisis continues for.
If it blows over, then all will be well in the garden; if it has
legs, then the impact is likely to be more profound," said
Jeremy Batstone-Carr, an analyst at Charles Stanley.
Coca Cola Hellenic dropped 3.8 percent, the biggest
decline in the FTSE 100. Brewer SABMiller, which also
has substantial exposure to emerging markets, fell 1.2 percent,
hit by a downgrade from Societe Generale.
The FTSE 350 Beverage index fell 1.3 percent,
taking its weekly loss to 6.7 percent.
Only 12 FTSE 100 stocks rose. BT gained the most,
after it reported quarterly revenue grew for the first time in
four and a half years. Record customer demand for superfast
broadband and its growing new sports TV service drove the gains.