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FTSE 100 Index down as Morrisons cautions over cost impact from Brexit-hit pound

Investors checked out of Morrisons on Thursday after the supermarket giant sounded a note of caution over the cost impact from the Brexit-hit pound.

The FTSE 100 Index was down 19.65 points to 7,314.96, with the Big Four grocer weighing on the London market after warning of the "impact on imported food prices if sterling stays at lower levels".

Shares in the grocer closed 6% lower, or 16.2p, to 230.8p, despite the firm revealing a 49.8% rise in pre-tax profits to £325 million.

The Bradford-based grocer also bagged like-for-like sales growth of 1.7% in the year to January 29 and 2.5% in the fourth quarter.

Neil Wilson, senior market analyst at ETX Capital, said Morrisons had taken a hit after shareholders noted the potential headwinds facing the grocery sector.

"T here are clearly headwinds for the sector and in its results it noted the pressures from a weak pound on imported goods. But Morrisons seems well placed to weather that as it sources more from the UK than its chief rivals.

"And like rivals, Morrisons is suffering from declining basket sizes, which on average fell more than 4.6%."

Across Europe, the Cac 40 in France rose 0.4% and Germany's Dax was marginally ahead.

On the currency markets, the pound edged slightly lower against the US dollar at 1.216, but recorded a 0.4% fall versus the euro at 1.149.

The European currency recorded a seven-week high against the pound after European Central Bank president Mario Draghi said the ECB no longer needed to express a "sense of urgency" over its willingness to ease monetary policy.

The price of oil sunk more than 2% after rising US crude inventories suggested the global glut would remain despite Opec's efforts to slash supply.

Brent crude fell one dollar and 33 cents to 51.80 US dollars a barrel.

In UK stocks, insurers Aviva and Admiral were among the biggest risers despite a strong contrast in their full-year results.

Shares in Aviva rose 6%, or 33p, to 544p, after pledging to hand more cash to shareholders and announcing a hefty jump in profits.

The insurance giant cheered a 12% rise in operating profits to £3.01 billion for the year ending in December, as it saluted a "breakout year" for its fund management arm.

Investors were also upbeat about Admiral despite the car insurer warning over price hikes as annual profits tumbled by a quarter.

The Cardiff-based group said it had already taken "pre-emptive" action to increase prices last December with "more to follow" as it looks to recoup a £150 million hit following a Government cut to the so-called Ogden discount rate calculation.

Shares in Admiral rose 81p to 1,910p.

The biggest risers on the FTSE 100 Index were Aviva up 33p to 544p, Capita up 24.5p to 549p, Admiral up 81p to 1,910p, and International Consolidated Airlines (IAG) up 23p to 571p.

The biggest fallers on the FTSE 100 Index were Morrisons down 16.2p to 230.8p, BHP Billiton down 76.5p to 1,249.5p, Anglo American down 55.5p to 1,149p, and Glencore down 11.7p to 307p.

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