London shares flew lower after Rolls-Royce (LON:RR.) shocked the market with a profit warning and a gloomy forecast for 2016.
The FTSE 100 Index fell 12.26 points to 6284 after the jet engine maker said 2015 profits would be at the lower end of its guidance.
Rolls also announced a review of its dividend and said market pressures were likely to have a bigger-than-expected impact on its 2016 performance.
The profit warning was the fifth from the company since February last year. Shares in Rolls-Royce fell 118p, or 17.7%, to 549p, a four-year low.
Keith Bowman at Hargreaves Lansdown said: "For now, despite management changes and a still-sizeable order book, current consensus analyst opinion of a weak hold is likely to come under further downward pressure."
However, shares in another UK aerospace and defence company, BAE Systems (LON:BA.) rose 14.2p to 452.5p after it said its markets were improving and it was still winning orders, despite warning that action to extend the life of Eurofighter Typhoon aircraft would affect 2015 results.
On the economic front, European Central Bank President Mario Draghi opened the door to more quantitative easing next month in comments to the European Parliament.
He said: "If we were to conclude our medium-term price stability objective is at risk, we would act by using all the instruments available within our mandate to ensure an appropriate degree of monetary accommodation is maintained." The euro fell to a session-low after the comments.
Back in the markets, Burberry (LON:BRBY) was in fashion with investors after announcing higher profits despite Chinese economic turmoil. Shares rose 18p to 1353p.
Car and bike accessory retailer Halfords (LON:HFD) fell 37.1p or 8.6% to 392.9p as first-half profits fell 6% after its cycling business had a weak July and August.
Elsewhere, Starcom (LON:STAR) leapt 0.62p, or 25%, to 3.12p as the remote tracking technology group unveiled a joint venture with US-based data management tech firm Sato Global Solutions.
Norcros (LON:NXR) climbed 14p to 193.5p after the bathroom accessory supplier reported a strong first-half performance with underlying pre-tax profits up 40% to £9.4mln.
MARKET PREVIEW
London’s blue-chip stocks are expected to begin Thursday lower as the oil sector continues to be impacted by low crude prices.
Crude prices slumped around 4% late on Wednesday to their lowest levels for two months and this morning Brent changes hands at US$46 per barrel while West Texas Intermediary crude is down at US$43.20.
It comes amid renewed bearishness over the prospects for a recovery, with key market commentators believing that it will take longer for the oil market to overcome its over supply problem.
Wall Street’s oil sector slumped about 2% by Wednesday’s close, and it was a drag on the main benchmarks.
The Dow Jones closed out Wednesday 55 points, 0.3%, lower at 17,702. Both the S&P 500 and Nasdaq fell around 0.3%.
In Asia, equities were on the rise.
Hong Kong’s Hang Seng was up 455 points, about 2%, at 22,812 though Japan’s Nikkei and the Shanghai Composite were mostly flat.
Strong jobs stats in Australia provided a boost and, according to experts, reduced the pressure on the country’s central bank to stimulate the economy with looser monetary policy.
In London, the FTSE 100 is seen slightly lower on Thursday with IG Markets calling the benchmark at 6,284 to 6,289.