FTSE 100 closes 1% lower as Pearson shares sink

Trader in London Image copyright AFP

London: The FTSE 100 index fell almost 1%, dragged lower by Pearson, to close 66 points lower at 6,947.5.

After warned of falling sales and "challenging" trading in a gloomy trading update, the world's largest educational publisher ended down 8.4% at 762.5p.

The company said underlying sales had fallen by 7% in the first nine months of the year.

Sales in North America - Pearson's largest market - have fallen by 9%.

Despite the decline, Pearson said cost cutting meant it was still on track to meet its profit targets for 2016.

Gary Paulin, head of global equities at Northern Trust Capital Markets, said: "We see that there is a risk that the tight cost controls could end up exacerbating the lack of growth risk. We remain sellers of Pearson."

Shares in two insurers, Admiral and Standard Life, both fell nearly 4%, with Standard Life admitting it would have to compensate some customers who had been mis-sold annuities in the past.

On the currency markets, sterling ended unchanged against the dollar at $1.219, but was down very slightly against the euro at €1.109.

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.

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