The FTSE 100 plunged after the Bank of England decided to keep interest rates on hold but told consumers and businesses to be on watch for a rate rise in the coming months.
This helped drive sterling to fresh 52-week highs against the dollar. A stronger pound means the relative value of overseas earnings, which account for 70% of the FTSE 100's total, goes down. At the close the index of leading UK shares was down 84.31 points at 7,295.39.
Mining stocks were also under pressure on weaker copper prices. Rio Tinto (RIO) falling 3.1% to £35.12 and BHP Billiton (BLT) off a similar amount at £13.64.
High street retailer Next's (NXT) first half sales and profits were in line with its cautious expectations after a difficult six months. Pre-tax profits fell by 9.5% to £309.4m and total sales were 2.2% down at £1,914.0m.
'While the external environment looks set to remain difficult, from where we stand today our prospects going forward appear somewhat less challenging than they did six months ago.' Its shares jumped 13.5% to £50.15.
Other retail stocks took their cue from Next with Marks & Spencer (MKS) a notable riser up 3.1% to 334.6p.
FTSE 100 RISERS AND FALLERS
Bradford-based grocer Morrisons (MRW) was marked down 5% to 232.8p as investors took profits following a good run for the shares. Half year results showed strong progress with CEO David Potts' turnaround. The supermarket's seventh consecutive quarter of positive like-for-like sales growth, up 2.6% before fuel and VAT, enabled Morrisons to report profit growth on growth for the first time in the turnaround.
FTSE 250 RISERS AND FALLERS
Safestore (SAFE) saw continuing positive trading across the group in the third quarter with particularly strong momentum in its Paris business. Group revenues rose to £32.9m - up 12.5% at constant exchange rates - with like-for-like revenues up 3.2% at constant currencies. Its shares dipped 0.6% to 406.3p.
GVC Holdings (GVC) advanced 7.1% to 856.5p after saying adjusted pre-tax profit rose by 99% to €101.9m in the six months to the end of June. Net gaming revenues of €486.2m were up 10% (+12% in constant currency) vs pro forma H1 2016 and clean EBITDA of €133.9m rose by 28% vs pro forma H1 2016 (€104.4m).
Spire Healthcare (SPI) slumped 17.7% to 255p after it revealed significantly lower than anticipated revenues in July and August and this trend in performance appeared to be continuing into early September.
SMALL CAP RISERS AND FALLERS
Interserve (IRV) crashed 52.7% to 78.5p on a major profit warning caused by disappointing UK trading in July and August.
Make up firm Warpaint London (W7L) fell 13.6% to 175p as investors expressed some disappointment in sales growth after the publication of the company's interim results, house broker Stockdale reduced its sales projections.
Ricardo's (RCDO) underlying pre-tax profits rose by 2% to £38.3m in the year to the end of June. Revenues were up 6% at £352m and the group's order book increased by 7% to a record £248m. Its shares were up 2.1% at 769.5p.
Allied Minds (ALM) rose 5.1% to 156.4p, paring earlier larger gains, as subsidiary Federated Wireless raised $42m from new investors. Excitement surrounding Federated Wireless' launch of the wireless industry's first spectrum controller, enabling government and commercial users to securely share the same spectrum band without impacting quality of service, was also behind the share price rise.