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FTSE dips on weak consumer outlook

Tuesday, October 23 11:04:13

Britain's blue-chip share index fell almost one percent today as downbeat comments from some consumer sector companies cast a shadow over the start of the earnings season.

Shares in Britain's biggest hotel and coffee shop operator Whitbread fell 3.2 percent after it said it expected sales growth to slow in the second half of its fiscal year due to flat consumer demand.

Burberry shed 4.3 percent as fellow luxury brand Mulberry added to the gloomy outlook for the sector with a profit warning, citing lower-than-expected retail sales abroad and a shortfall on wholesale revenue.

A summer rally for major stock markets on the back of the promise of bold action by central banks in Europe and the United States has largely faded in the last month due to concerns over the outlook for global growth and corporate earnings.

"Everyone has hidden in these safe haven stocks and at times of anaemic global growth you get found out," Andy Ash, head of sales at Monument Securities, said.

"Markets find it very difficult to deal with neutral and the economic situation in the Western world is barely growing... and it will be like that for a long time."

Numis Securities downgraded its rating for Whitbread to "hold" from "add", citing valuation grounds after a strong run in the stock, which hit all-time highs earlier this month.

Burberry and Whitbread were the top fallers on Britain's FTSE 100 index, which was down 46.11 points, or 0.8 percent, to 5,836.77 by 0812 GMT, extending a 34 points slide in the previous two sessions.

Curbing losses on the index was chip designer ARM Holdings , which rose 2.7 percent as it posted three-quarter earnings slightly ahead of market expectations, after it made further inroads into markets like digital TVs and microcontrollers.

Trading volume on the FTSE fell to the sort of anaemic levels last seen in August on Monday, with around 540 million hares changed hands compared to 1.5 billion shares when the U.S. Federal Reserve announced its new stimulus plan on September 14, the busiest session since June. (C ) Reuters