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Sainsbury's pulls FTSE 100 into the red after 8.2% drop in bottom line profits


The FTSE 100 closed lower by 0.2% or 15.52 points at 7,234.53

The FTSE 100 closed lower by 0.2% or 15.52 points at 7,234.53

The FTSE 100 closed lower by 0.2% or 15.52 points at 7,234.53

Supermarket giant Sainsbury's pulled London's blue chip index into the red after reporting an 8.2% drop in bottom line profits and warning over falling consumer confidence.

The FTSE 100 closed lower by 0.2% or 15.52 points at 7,234.53, with J Sainsbury the worst performing stock on the index down 16p to 263.5p.

The company revealed on Wednesday that bottom line profits dropped 8.2% to £503 million for the year to March 11, while underlying profits fell for the third year in a row, as it tried to keep prices low amid cost pressures from the Brexit hit pound and higher wages for staff.

It said that h igher costs - together with seasonal losses expected from Argos - will see first-half profits come in lower than the second half.

In currency markets, the pound lost ground against the US dollar, falling more than 0.1% to trade around 1.291.

Versus the euro, sterling was down around 0.1% at 1.182.

That is despite data showing a rebound in construction output in April, which rose at its fastest rate so far this year amid a jump in house building and civil engineering activity.

The closely watched Markit/CIPS UK Construction purchasing managers' index (PMI) rose to 53.1 in April, up from 52.2 in March and above economists' expectations of 52.0.

A reading above 50 indicates growth.

Across Europe, the French Cac 40 fell 0.0.6% while the German Dax rose 0.16%.

In oil markets, Brent crude prices slumped 1.5% to 50.36 US dollars per barrel (£39.02), despite American Petroleum Institute (API) showing a bigger-than-expected fall in US crude inventories.

In UK stocks, ITV shares slumped 3.7p to 207.8p after announcing that chief executive A dam Crozier will leave the company on June 30 after seven years, with a long-term successor to be revealed "in due course".

Marks and Spencer Group shares dropped 4.3p to 366.5p amid news that it poached Halfords chief executive Jill McDonald to run its embattled clothing arm.

Halfords Group shares fell 9.8p to 365p following the news.

Shares in Mitie Group leaped 19.9p to 231.3p despite revealing it would take a £40 million to £50 million hit after a review of its books uncovered a "number of material errors".

JD Wetherspoon rose 30p to 1,040p after reporting that like-for-like sales jumped 4% in the third quarter to April 23 this year, while total sales lifted by 1.3%.

Shares in Galliford Try plunged 156p to 1,306p after the housebuilder said it would take a "regrettable" £98 million hit following a financial review of two major joint infrastructure projects.

The biggest risers on the FTSE 100 were Sage Group up 23.5p to 707p, Johnson Matthey up 89p to 3,097p, Micro Focus International up 48p to 2,660p, and Pearson up 11p to 656.5p.

The biggest fallers on the FTSE 100 were J Sainsbury down 16p to 263.5p, Paddy Power Betfair down 380p to 8,395p, Glencore down 11.05p to 286.8p, and Tesco down 6.25p to 176.75p.