US slowdown hits London's FTSE 100

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(Close): Shares in Next rose after the retailer reported stronger-than-expected sales, but the FTSE falls after weaker US growth figures.

Next said that full-price sales for the 13 weeks to 25 April climbed 3.2%, helped by April's warm weather, and its shares rose 1.6%.

But after a mixed morning, the FTSE 100 closed down 1.2% at 6,946.28.

Investors were cautious after an unexpected slowdown in the US economy in the first quarter of the year.

Growth in the US economy slowed to just 0.2% in the first three months of the year.

Traders were also waiting for the outcome of a meeting by the US central bank, which could give clues about the timing of the Federal Reserve's first rate hike.

Shares in Barclays slipped 1.7% after the bank announced it was setting aside a further £800m to cover the cost of settling an investigation into foreign exchange rate-rigging. Barclays also took a further £150m hit to cover payment protection insurance (PPI) mis-selling.

The top riser in the FTSE 100 was Weir Group. The company said first-quarter orders from its oil and gas business were down 23%, but this was not as bad as expected and its shares rose 5.6%.

Weir also said it cut costs at its oil and gas business by a further £10m.

In the FTSE 250, shares in Greggs rose 7.3% after the bakery chain announced a £20m special dividend.

Greggs said the dividend would replace a previously-proposed share buyback.

The firm also reported a 5.9% increase in same-store sales in the 16 weeks to 25 April, beating expectations.

On the currency markets, the pound rose 0.93% against the dollar to $1.5481 and slipped 0.87% against the euro to €1.3851.