* FTSE 100 down 39.17 points at 6,509.94
* Consumer stocks hit as Danone cuts 2013 goals
* Miners erase previous session's gains on US debt worries
* IMI rallies after selling beverage business
By David Brett
LONDON, Oct 16 UK consumer-focused stocks fell
on Wednesday after a handful of weak updates from major European
producers dented sentiment in the sector, while the broader
index suffered again from debt wrangling in the United States.
Consumer staples and discretionary stocks combined to take
15 points off the FTSE 100 after Danone, the
world's largest yoghurt maker, cut its 2013 goals as problems in
China hit third-quarter sales.
Also feeding in to a bearish morning for the sector were
surprisingly poor sales from the world's biggest luxury goods
maker, Louis Vuitton owner LVMH, and French
advertising group Publicis.
UK-listed fashion firm Burberry, which warned on
Tuesday that the slowdown in Chinese markets may not be
temporary, fell a further 2.4 percent having shed 7.6 percent in
the previous session.
By 1044 GMT, London's blue chip index was down 39.17 points,
or 0.6 percent at 6,509.94, with investors generally in anxious
form after a chaotic day of Congressional wrangling in
Washington failed to result in a deal to avert a U.S. debt
default as the Oct. 17 deadline loomed.
"I am cognisant of the downside risks here," Dan McCormack,
analyst at Macquarie, said. "A default is highly unlikely
because nobody wants it but there could be a larger fiscal
tightening than the market is assuming."
"In the near term it's going to be a kick the can down the
road exercise as the most likely outcome which just means we go
through all this again in three to six months, and it does push
uncertainty out for longer."
Having rallied on Tuesday on the belief that U.S. lawmakers
were nearing a deal the FTSE 100 erased all the previous
session's gains around midday on Wednesday with the miners
, a sector acutely exposed to fluctuations in the
perception of the global economy, among the heaviest retreaters,
down 1.4 percent.
Capita slipped 1.4 percent, extending weakness from
the previous session when it was announced that Invesco
Perpetual UK equities fund manager Neil Woodford would leave the
company after 25 years.
Although Woodford, who will be replaced by Mark Barnett, is
not due to leave the company until April 2014, stocks in which
his fund has a major holding have weakened on worries that
positions could be scaled-back.
Despite the session's retreat technical analysts said that
the index's recent uptrend remains intact boosted by rising lows
since Oct. 10, which are providing support for now.
Near-term support was seen at 6,525 and there was little
resistance expected before 6,665 for any resulting relief rally
if and when Washington finally delivers what the markets want, a
technical analyst said.
Thin trading volumes suggest many investors are sticking to
the sidelines pending fresh developments in Washington. Halfway
through the month, the index has traded just over a third of the
volume seen for the whole of September.
Reckitt Benckiser was the top weighted faller, down
2.3 percent, while drinks firm SAB Miller, which reports
on Thursday, shed 1.3 percent.
On the upside, IMI climbed 2.3 percent to 1,533
pence, topping Britain's FTSE 100 index in brisk trade
after the engineer announced the sale of its beverage dispense
and merchandising business for 690 million pounds ($1.1
"We see the disposal as a positive catalyst for the share
price given the company strategy to move into higher margin
areas... (and) see upside from these levels to trade at close to
17 pounds," Atif Latif, director at Guardian Stockbrokers, said.
(Reporting by David Brett)