B&M European, ex-dividend trades drag FTSE 100 lower ahead of services activity data

London's FTSE 100 snapped a three-day winning streak to inch lower on Thursday, as B&M European Value Retail's downbeat earnings outlook and ex-dividend trades weighed, while investors eyed services sector activity data due later in the day. The blue-chip index fell 0.7%, with the discount retailer declining 2.1% after it forecast trading to remain volatile this year and organic growth to likely decline.

National Grid slipped 4.5% to the bottom of the index, while home improvement retailer Kingfisher lost 2.8%, as they traded without entitlement to a dividend payout. The domestically focused mid-cap FTSE 250 index declined 0.3%, easing from a record peak scaled in the previous session.

Asian shares stepped back from three-month highs too, as market participants weighed inflation concerns ahead of key U.S. economic data this week, including a weekly unemployment report, May private payrolls data, and monthly jobs numbers. "Given that it is half-term in many places and markets have been in a tight range for several days, it doesn't feel we are going to get much excitement until the all-important payrolls release tomorrow," Deutsche Bank strategist Jim Reid wrote in a note.

"So, enjoy the next 30 hours of relative calm." After breaking above the 7,000-mark in mid-April, the FTSE 100 index has moved in a narrow range since then on worries that rapid economic growth could lead to higher inflation and sooner tightening of ultra-loose monetary policies.

Earlier this week, data showed a record increase in British manufacturing activity in May, and the focus now turns towards IHS Markit's services sector PMI due at 0830 GMT. Among other stocks, Workspace Group dropped 2.3% after the office-space provider slipped into its first annual loss in 12 years.

BT Group fell 2.8% after Deutsche Bank downgraded the telecom group's stock to "sell," saying it is overvalued. Chemicals maker Johnson Matthey rose 1.3% after it entered into a joint agreement with Nano One Materials to develop lithium-ion battery materials.

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