London stocks hit by weak Diageo, Babcock earnings

Weak quarterly earnings reports from spirits maker Diageo and engineer Babcock pressured London-listed stocks on Tuesday, while BP tracked its best day in two months after delivering a widely expected dividend cut.

Weak quarterly earnings reports from spirits maker Diageo and engineer Babcock pressured London-listed stocks on Tuesday, while BP tracked its best day in two months after delivering a widely expected dividend cut. Diageo Plc, the world's largest spirits maker, slumped 6.5% to a one-month low as it reported a bigger-than-expected decline in underlying net sales on lower demand for its whisky, vodka and gin in all markets except North America.

The blue-chip FTSE 100 was down 0.3% after bouncing on Monday as data from around the world pointed at a sharp jump in factory activity. The mid-cap FTSE 250 edged higher as easyJet Plc jumped 9.8%, but a 12.6% slump for Babcock following a plunge in quarterly profit capped gains.

BP rose 6.6% as it cut its dividend in a widely expected move and outlined plans to sharply reduce its oil and gas output by 2030 and boost its renewable power generation. "It was a tricky start for the FTSE 100, which saw itself caught between a pair of major earnings updates," said Connor Campbell, financial analyst at Spreadex.

"On one hand you had BP surging as investors appeared to reward its decision to halve dividend, (and) on the other, there was Diageo, which was forced to take a writedown because while you might feel like you're drinking more at home, that doesn't quite compensate for the loss of pubs and bars." The FTSE 100 has struggled to build on a stimulus-led stock market rally with the world sliding into a deep recession and surging COVID-19 cases threatening even more lockdowns.

The focus in Britain this week is on a central bank meeting where the Bank of England is expected to shed more light on the pace of an expected domestic rebound.

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