FTSE gives up 1pc as economic fundamentals hit retail and leisure

A PERFECT storm created by a rising pound, the IMF slashing its UK growth forecast and mounting concerns over the consumer backdrop sent the FTSE 100 sliding to its third worst session of the year.

The index closed 75.18 points down at 7,377.73, a 1pc slump, and a torrid day of trading could have been much worse had the pound rebounded more strongly against a retreating euro and a dollar languishing close to a one-year low.

Clothing retailer Next trailed a floundering wider market after RBC Capital Markets spooked investors on the company’s outlook, warning that the tough consumer backdrop will remain difficult for the blue-chip firm until next year. The broker slashed its target price for Next by £3, to £43, and told clients that the retailer might have to wait until the second quarter of 2018 until it feels any benefit from a drop-off in inflation.

Sluggish wage growth and the squeeze on the UK consumer will pull down results with womenswear and furniture sales already feeling the heat, it said. Next closed 117p lower at £37.10. But consumer goods multinational Reckitt

Benckiser finished bottom of the pile, slipping 3.3pc, after telling shareholders that second-quarter results impacted by “challenging market conditions” were worsened by the cyber attack on the company in June. Investec reiterated its “sell” rating for the company, warning clients that “further cracks” were appearing at the company, and investors dumped the stock, Reckitt weakening 258p to £76.23.

Low-cost carrier easyjet’s losing streak extended into a third day after closest rival Ryanair forecast incoming turbulence within the sector and a price war escalation as it promised to pass on fuel savings to customers. easyjet nosedived a further 37p to £12.75.

Elsewhere, iphone graphics chip-maker Imagination Technologies

jumped 7.75p to 146p as investors digested a report in The Sunday Telegraph that revealed Canyon Bridge Capital Partners, a Silicon Valley-based private equity firm backed by the Chinese government, has held takeover talks with the beleaguered tech firm.

Finally, Acacia Mining fell a further 47.9p to 184.5p, on news it could face a lawsuit in relation to deaths at one of its Tanzanian mines and it also received a demand for $190bn (£146bn) in back taxes from the government there. It is disputing the bill.