Cigarette makers, AB Foods weigh on FTSE 100; Elementis shines By Reuters

By Devik Jain

(Reuters) -London’s FTSE 100 fell on Tuesday, dragged down by stocks of heavyweight banking and cigarette makers, while Associated British Foods (LON:ABF) slipped after a downbeat first-half earnings update.

The blue-chip index slipped 0.2%, with tobacco firms British American Tobacco (LON:BATS) and Imperial Brands (LON:IMB) declining 5.9% and 5.2%, respectively, to the bottom of index after a media report said the U.S. is considering a rule to cut nicotine in all cigarettes sold in the country to levels at which they are no longer addictive.

Shares of Primark-owner AB Foods fell 0.7% after it posted a 50% drop in first-half profit, hurt by COVID-19 lockdowns that shuttered its Primark fashion stores.

The domestically focussed mid-cap FTSE 250 index inched 0.02% lower. Chemical company Elementis (LON:ELM) Plc surged 18.6% after a media report said it has got a fresh takeover bid from U.S.-based Innospec Inc that values it at over 1 billion pounds ($1.40 billion).

Meanwhile, official figures showed Britain’s unemployment rate unexpectedly fell to 4.9% in the December-February period, although tax data showed the number of employees on company payrolls fell by 56,000 between February and March, the first decline in four months.

“Most of the data published by the ONS (Office for National Statistics) today is unsurprising … it’s important to remember these figures are still skewed by the hundreds of thousands of workers supported by the government’s furlough scheme,” said Danni Hewson, financial analyst at AJ Bell.

“Whilst the hope is the majority of those will be reintegrated back into the workforce, hope doesn’t pay the bills. Until the temporary ends, the reality can only be weighed and considered.”

Among other stocks, Jupiter Fund Management fell 1% after the wealth manager recorded $1 billion net outflows in the first quarter due to weak client demand for UK and Europe-focused equity strategies.

However, cyber security company Avast jumped 3.1% to the top of FTSE 100 index after upbeat first-quarter trading update.

($1 = 0.7143 pounds)