FTSE 100 falters on Imperial Brands profit warning, coronavirus fear

(Reuters) - UK shares ended a two-day rally on Wednesday, as tobacco group Imperial Brands slid after sounding a profit warning alarm and the coronavirus epidemic kept investors on edge.

FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville/File Photo

The FTSE 100 .FTSE lost 0.2% by 0825 GMT, after gaining more than 2% over the last two sessions when China announced stimulus measures to safeguard against any hit from the virus outbreak, which has killed nearly 500 people.

The midcaps .FTMC were flat.

Imperial Brands IMB.L fell 5.2% and was set for its worst day in four months, after it forecast lower profit because of a U.S. regulatory ban on some flavours of cartridge-based vapour devices.

The UK benchmarks dwindled in value last month as the coronavirus, which was identified in late 2019, spread quickly across the globe and led to businesses curtailing their operations in China.

The bluechips lost 3.4% in January, more than twice the fall suffered by its European counterpart .STOXX due to its greater exposure to commodity prices.

But the markets picked up this week as strong U.S. manufacturing data and the Chinese central bank’s steps to tackle any impact from the epidemic injected some calmness among investors.

“A second influx of Chinese central bank liquidity is keeping the wheels turning in financial markets, but cannot stop the real-life effect of a spreading coronavirus,” London Capital Group analyst Jasper Lawler said.

Some stocks outperformed broader indexes after positive corporate updates.

Barratt Developments BDEV.L was the best blue-chip performer after it posted an increase in first-half earnings as demand for lower-priced homes surged, and announced a special dividend.

Domino's Pizza Group DOM.L, Britain's biggest pizza delivery company, jumped 9% to top the midcap index as it posted a rise in fourth-quarter group system sales on higher demand in the UK.

Car dealership Lookers LOOK.L gained 2% after it appointed current Chief Financial Officer Mark Raban as its top boss and forecast annual results to be in line with expectation despite a tough fourth quarter.

Reporting by Muvija M in Bengaluru; Editing by Bernard Orr