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FTSE 100 falls as Pearson shares hit FTSE 100 falls as Pearson shares dive
(about 4 hours later)
Shares in Pearson fell nearly 5% in early trade after the education publisher reported a worse-than-expected fall in sales. Shares in education publisher Pearson plunged 11% after it reported falling sales amid "challenging" trading.
Underlying sales fell 7% in the first nine months of the year, compared with analysts' forecasts of a 5% drop. Underlying sales fell 7% in the first nine months of the year, with sales in North America - its largest market - down 9%.
However, Pearson said cost cutting meant it was still on track to meet its profit targets for 2016. Despite the decline, Pearson said cost cutting meant it was still on track to meet its profit targets for 2016.
Pearson shares fell 4.8% to 792.50p. It was the biggest faller on the FTSE 100, which fell 41.17 points to 6,972.38. But one analyst said the company faced challenges from the changing nature of of the education business.
Shares in housebuilders were under pressure, with Persimmon and Barratt Developments both down by about 1.5%. "Having sold off The Economist and The Financial Times, Pearson is now relying on its core educational businesses for forward momentum, but convincing customers to continue paying for its content represents a huge challenge to the group against a backdrop of free educational resources popping up online," said Hargreaves Lansdown equity analyst George Salmon.
Ladbrokes shares fell 2.4%. The bookmaker, which is planning to merge with Coral, announced the two had sold 359 shops to Betfred and Stan James as part of the conditions they must meet in order for their tie-up to be approved by competition authorities. Shares in Pearson fell 93.50p, or 11.2%, to 739p. That made it the biggest faller on the FTSE 100, with the UK's benchmark share index down 59.54 points, to 0.9%, at 6,954.01 shortly before midday.
On the currency markets, the pound was little changed against the dollar at $1.2183, and was 0.1% lower against the euro at €1.1096. Ladbrokes shares fell 1.9%. The bookmaker, which is planning to merge with Coral, announced the two had sold 359 shops to Betfred and Stan James as part of the conditions they must meet in order for their tie-up to be approved by competition authorities.
The yield on UK government bonds, or gilts, edged higher with the yield on benchmark 10-year gilts hitting 1.17%, On the currency markets, uncertainty over the terms of the UK's exit from the EU continued to weigh on the pound. Sterling dipped 0.2% against the dollar to $1.2162, and was 0.3% lower against the euro at €1.1071.
The yield on UK government bonds, or gilts, rose with the yield on benchmark 10-year gilts hitting 1.21% at one point on Monday morning - the highest rate since 24 June, the day after the EU referendum.
Gilt yields - which move inversely to the price of bonds - have been rising over the past few days. Analysts have said the increase is due to the uncertainty over the impact of Brexit and expectations of accelerating inflation as the pound weakens.Gilt yields - which move inversely to the price of bonds - have been rising over the past few days. Analysts have said the increase is due to the uncertainty over the impact of Brexit and expectations of accelerating inflation as the pound weakens.