The FTSE 100 sank in the afternoon session as the pound rose to its highest in a year against the euro on the back of a European Central Bank (ECB) pledge to keep rates very low. The index closed 30.44 points or 0.5 per cent lower at 6,691.34.
Craig Erlam, an analyst at Alpari, said: “I can certainly see sterling continuing to strengthen in the coming months.
“Whether it’s going to push the FTSE further down or just limit its potential to rally, it’s probably going to be the latter, but it’s definitely going to be detrimental.”
In a busy day for corporate updates, retailers took diverging paths as Marks & Spencer was judged to have proved its naysayers wrong thanks to a solid performance at its food division. It topped the blue-chip risers’ board with a gain of 3.6 per cent, to 460.9p.
But supermarket chain Morrisons plunged nearly 8 per cent after it brought forward its post-Christmas update to reveal worse-than-expected figures. The stock lost 19.7p at 234.5p.
Bookmaker William Hill was another big faller in the top flight after Prime Minister David Cameron voiced concern about fixed-odds betting terminals – a big revenue driver for the industry which is already facing calls for a review.
A downbeat note on the sector from Barclays added to the gloom as William Hill’s shares slumped 28.7p to 371.1p, a drop of 7 per cent. FTSE 250 rival Ladbrokes fell 15.6p to 164.1p.
Frankie & Benny’s and Garfunkel’s owner Restaurant Group fared well after it said full-year profits should beat market forecasts. Shares lifted 34p to 629p.