FTSE slumps despite froth of Costa deal

Market report Emma Newlands

Whitbread shares raced higher amid cheer over its £3.9 billion deal to sell Costa Coffee, but failed to stop the wider London market sinking deep into the red.

London’s FTSE 100 Index closed down 83.6 points at a four-month low of 7,432.4 despite the boost from Whitbread as shareholders welcomed the deal with Coca-cola, which will see a chunk of proceeds returned to investors. The rally saw the Costa owner’s shares hit their highest level for almost three years.

And with the deal seen as a welcome vote of confidence in UK retail, the news sparked gains for the likes of Tesco, up 1.8p at 246.5p, Next, ahead 6p at 5,500p and Marks & Spencer, ahead 0.1p at 301.6p.

But the FTSE joined indices globally in tumbling into negative territory as fears over trade tensions between the US and China returned to spook investors. The Dow Jones Industrial Average on Wall Street was also more than 50 points lower at the time of close in London.

On currency markets, the pound was 0.3 per cent lower at $1.30 and 0.3 per cent higher at €1.12.

Housebuilders were also on the fallers board after data revealing that house prices suffered their biggest month-on-month dip in six years last month. Taylor Wimpey led the sector lower on the top tier, down 2.5p at 167.4p, followed by Persimmon, off 35p at 2,433p. The biggest risers on the FTSE 100 included

Severn Trent, ahead 18.5p at 2,001p and Tesco,

1.8p higher at 246.5p. The biggest fallers included Burberry, off 71p at 2,236p, and Glencore, 9.4p weaker at 313.6p.