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Weaker defensives drag FTSE down from highs
January 8, 2014 / 9:58 AM / 4 years ago

Weaker defensives drag FTSE down from highs

* FTSE 100 index down 0.3 percent

* Defensive stocks lose ground

* Sainsbury slips after opening higher

By Atul Prakash

LONDON, Jan 8 (Reuters) - Investors took profits from two-month highs and trimmed exposure to defensive stocks on Britain top share index on Wednesday against a background of a gradually improving global economics.

The blue-chip FTSE 100 index fell 0.3 percent to 6,737.72 points after climbing to its highest since early November in the previous session.

Defensive stocks fell. British American Tobacco and Imperial Tobacco dropped 1.2 percent and 1.6 percent respectively, targeted after Hong Kong’s South China Morning Post newspaper reported that health authorities in China aim to roll out a nationwide smoking ban in public places by the end of this year, traders said.

Drugmakers GlaxoSmithKline, AstraZeneca and Shire dropped 0.3 to 0.6 percent.

“The market is facing pressure from big defensive names. We are seeing some rotation from safe stocks to riskier names because of global growth optimism,” Mike van Dulken, head of research at Accendo Markets, said.

Data showed German exports rose for a fourth consecutive month in November as trade picked up especially to European Union countries outside the euro, in a fresh sign that Europe’s largest economy is benefiting from the strat of a global upturn.

Some individual share moves were choppy. Grocer J Sainsbury opened higher after reporting that sales at its stores open over a year rose 0.2 percent in the 14 weeks to Jan. 4, beating forecasts which ranged from flat to down 1 percent.

But shares later fell 2.3 percent after its chief financial officer lowered the company’s growth forecast.

“We expect this to be the best performance amongst the big four supermarkets. On the other hand, the comments for the rest of the year are cautious and the economic backdrop remains uncertain. Hence, Sainsbury’s fourth quarter sales are likely to remain muted, although positive,” Guy Foster, head of portfolio strategy at Brewin Dolphin, said.

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