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Rolls-Royce's £4.6bn loss weighs heavy on FTSE 100

London's top-flight index slipped into the red as shares in Rolls-Royce plunged after the embattled engine maker reported one of the biggest losses in UK corporate history.

The blue chip giant slumped into the red with a pre-tax loss of £4.64 billion for 2016 after a £4.4 billion writedown caused by the collapse of the pound since the Brexit vote, as well as a £671 million penalty to settle bribery allegations.

Investors took flight, causing shares to drop more 4% or 29.5p to 710.5p, with the FTSE 100 Index slipping 10.36 points to 7,268.56.

The huge annual loss follows a tough past two years for Rolls after a string of profit warnings and last month's settlement in a case brought by the Serious Fraud Office and authorities in the US and Brazil.

Across Europe, Germany's Dax was marginally down, while the Cac 40 in France rose 0.2%.

On the currency markets, sterling took a tumble after the latest inflation figures for January came in shy of economists' expectations.

The Office for National Statistics (ONS) said the Consumer Price Index (CPI) measure of inflation hit 1.8% last month, up from 1.6% in December, marking its highest level since June 2014.

The main driver behind January's jump came from transport prices, which dropped by less than the amount a year ago, falling by 0.6% between December and January, compared with a 2.5% drop the year before.

Overall food prices were also flat between December and January after falling 0.6% a year ago, as the sharp drop in grocery costs, triggered in part by the supermarket price war, ground to a halt.

The pound was down 0.6% against the US dollar at 1.245 and 0.3% lower versus the euro at 1.178.

The price of oil was up 0.4% to 55.79 US dollars a barrel, but saw gains trimmed after rising US shale output overshadowed Opec's efforts to slash global production.

In UK stocks, Thomson owner TUI was in the ascendancy after investors cheered results showing narrowing losses in the first quarter.

It said its net loss for the period came in at 81.6 million euro (£69 million), an improvement compared to last year's 138.7 million euro (£117 million).

Tui said its Northern region division - which includes Britain, Ireland, the Nordics, Canada and Russia - benefited from a "strong trading performance in source market UK & Ireland, with volumes currently up more than 10% year-on-year".

Shares were up more than 5%, or 61p to 1,218p.

The biggest risers on the FTSE 100 Index were TUI up 61p to 1,218p, Royal Bank of Scotland up 6.4p to 241p, Capita up 13.5p to 527p, International Consolidated Airlines Group (IAG) up 8.7p to 503p.

The biggest fallers on the FTSE 100 Index were Rolls Royce Holdings down 29.5p to 710.5p, Reckitt Benckiser down 149p to 6,926p, CRH down 52p to 2,733p, BAE Systems down 10.5p to 605.5p.

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