FTSE 100 Falls on Rentokil Warning and U.S. Inflation Concerns

The UK's FTSE 100 index declined due to Rentokil's profit warning on North America and U.S. inflation concerns. Rentokil shares plummeted 20%, and industrial support services stocks fell by 3.4%. Meanwhile, precious metal miners rose, and Britain's economic production grew less than expected. WH Smith shares surged after a positive revenue report.

The UK's benchmark FTSE 100 stock index ended lower on Wednesday, led by a decline in Rentokil shares after the pest control company warned on North American weakness, while investors assessed the latest U.S. inflation numbers.

The blue-chip FTSE 100 was down 0.2%, while the mid-cap FTSE 250 lost 0.6%. Rentokil Initial issued its third warning of lower annual profit after weaker-than-expected sales in its largest market North America, sending shares of the pest control company down by as much as 20%.

The company also announced a cut of an undisclosed number of jobs in its U.S. workforce to address cost overruns. The broader industrial support services stocks led sectoral declines with a 3.4% loss. Stock indexes came under pressure globally after consumer prices in the United States increased marginally in August, but underlying inflation showed some stickiness, which could discourage the Federal Reserve from delivering a half-point rate cut next week.

Over 80% of traders now expect the U.S. central bank to cut interest rates by 25 basis points, according to CME Group's FedWatch tool. Rate-sensitive homebuilders slipped 0.9% in the UK.

In contrast, precious metal miners, the top performing sector of the session, inched 1.4% higher. Centamin rose 1.8%, extending gains for the second consecutive session after the gold miner agreed a $2.5 billion takeover by AngloGold Ashanti on Tuesday. Meanwhile, data showed Britain's economic production grew by less than expected in month-on-month terms in July, showing no change after zero growth in June.

'The figures are not bad enough to change the course the BoE is sailing on. An unexpected (cut) or a cut that's too large might be a signal to investors that the economic prognosis is significantly worse,' said Nick Saunders, chief executive officer of trading platform Webull UK. Shares of WH Smith jumped 10.8% after the company reported a higher annual revenue and announced a buyback plan worth 50 million pounds.

(With inputs from agencies.)