By Carla Mozee and Barbara Kollmeyer, MarketWatch
Government to bump up living wage by 4%
U.K. stocks ended little changed Wednesday, with retail and housing shares flipping lower after the British government unveiled budget plans, while some mining shares held to higher ground.
The FTSE 100 ended down by 2 points at 6,817.71, giving up an earlier rise of 0.9%.
The index fell by as much 0.6% after U.K. Chancellor of the Exchequer Philip Hammond talked about the Conservative government's budget for the first time since the U.K. voted to leave the European Union in a June referendum.
Retail stocks dropped after Hammond said the government plans to raise the national minimum wage to GBP7.50 ($9.34) an hour from GBP7.20 an hour, beginning in April 2017. Shares of supermarket chain Tesco PLC (TSCO.LN) briefly fell to the bottom of the FTSE 100 as they lost 2.4%. Apparel and accessories retailer Next PLC (NXT.LN) gave up 1.4% and electronics seller Dixons Carphone (DC.LN) moved down 1.5%.
Housing: The government will launch at GBP2.3 billion housing infrastructure fund to aid in providing high-demand areas with 100,000 new homes, and will offer GBP1.4 billion for an extra 40,000 affordable homes.
"Affordable homes tend not to be the cash cows of many development companies. Not to say they don't participate in these kind of schemes, but it doesn't necessarily move the dial in terms of their revenues a great deal," said Ken Odeluga, market analyst at City Index. "I think that's why the market isn't reacting with a great ebullience to that particular part, but it's a worthy measure to be announced."
Shares of home builder Persimmon (PSN.LN) fell 1.8%, Barratt Developments PLC (BDEV.LN) declined 2% and Taylor Wimpey PLC (TW.LN) pulled back 1.5%.
Treasury chief Hammond also said the government will ban fees charged by letting agencies to renters "as soon as possible." Shares of real-estate agents had been down earlier Wednesday on market talk that such fees would be reduced. Foxtons Group PLC (FOXT.LN) stumbled, closing down by 14.3%, and Countrywide PLC (CWD.LN), the U.K.'s largest real estate agency, sank 5.2%.
The average fee charged by agents licensed by the Association of Residential Letting Agents is GBP202 per tenant. If fees are banned, landlords will end up recouping the costs through higher rents, the industry body said early Wednesday.
Hammond said in terms of the short-term economic growth view, gross domestic product is expected to slow to a rate of 1.4% in 2017 compared with aprevious view of 2.2%. Meanwhile, the government plans to launch a GBP23 billon fund for infrastructure and innovation to run over the next five years.
See: The U.K.'s 'Autumn Statement'--what's new and what it means for the economy (http://www.marketwatch.com/story/the-uks-autumn-statement-whats-new-and-what-it-means-for-the-economy-2016-11-23)
Miners: Mining shares ended mixed after broadly advancing early in the session, "with iron ore prices rocketing as investors take an ultra-optimistic view of future demand," said Rebecca O'Keeffe, head of investment at Interactive Investor, in a note to clients.
Goldman Sachs lifted its iron ore price forecasts over the next three, six and 12 months, with analysts saying in a research note Wednesday that the 2016 market for the metal has "benefited from better fundamentals and favorable technicals."
O'Keeffe cautioned against counting too much on increased demand for commodities from the U.S. following the election victory for Donald Trump. The Republican president-elect has pledged to raise spending on infrastructure, seen as potentially driving that demand. But for one thing, the U.S. gets most of its steel from scrap, O'Keeffe noted.
Iron ore heavyweights BHP Billiton PLC (BHP.AU) (BLT.LN)(BHP.AU) and Rio Tinto PLC (RIO) (RIO) (RIO) ended up 2.2% and 0.9%, respectively.
But gold miner Fresnillo PLC (FRES.LN) fell 3% and Randgold Resources Ltd. (RRS.LN) moved down 2.2% as gold prices gave up roughly 2% (http://www.marketwatch.com/story/gold-rally-fizzles-as-dollar-surges-on-strong-economic-data-2016-11-23).
The pound seesawed during the session, eventually rising to $1.2446 after trading little changed around $1.2388 as Hammond spoke in parliament. Sterling late Tuesday bought $1.2417.
With an eye on potential inflationary pressures stemming from the government's spending plans, bond prices fell and pushed the 10-year gilt yield up 5 basis points to 1.44%.
(END) Dow Jones Newswires
November 23, 2016 12:34 ET (17:34 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.