*
Next jumps after maintaining profit forecast
*
Shell gains on quarterly profit beat
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UK services PMI rises in March
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FTSE 100 down 1.1%, FTSE 250 off 0.6%
(Recasts lede, adds comments, Next share move and services
sector data in paragraphs 9 and 12)
By Shristi Achar A and Amruta Khandekar
May 4 (Reuters) - London's FTSE 100 hit a one-month low
on Thursday as a smaller interest rate hike by the European
Central Bank did little to lift sentiment dampened by concerns
about the banking sector, while Shell gained after posting
upbeat earnings.
The blue-chip index ended 1.1% lower, while the
mid-caps index fell 0.6%.
Financial stocks were the top drag on the FTSE 100, with the
banking index down 1.7%, as renewed fears about a
crisis among regional lenders in the United States hurt risk
sentiment.
"We are seeing fears over the U.S. banking sector, and
worries about potential contagion to Europe, rearing its head
again," said Stuart Cole, chief macro economist at Equiti
Capital.
Meanwhile, the European Central Bank raised rates by 25
basis points on Thursday in the smallest move so far in its
current cycle of rate hikes.
However, unlike the U.S. Federal Reserve, the ECB said
further tightening was likely given mounting price pressures.
"(Interest rate concerns) are dampening down the positive
sentiment that's coming from the better earnings," said James
Baxter, founder of Tideway Wealth.
Oil giant Shell rose nearly 1% after posting a
first-quarter net profit of $9.65 billion, which topped
analysts' forecasts.
Shares of Next Plc climbed 3.2% to the top of the
FTSE 100 gainer list after the fashion retailer maintained its
guidance for annual profit.
Base metal miners , however were a drag,
falling 3.4% despite a rise in metal prices, as a
weaker-than-expected demand recovery in top consumer China
dented sentiment. Among other major movers, Hargreaves Lansdown rose
1.1% after the investment manager reported a rise in its net new
business, aided by a revival in investor sentiment.
Data showed Britain's services sector kicked off the second
quarter with its fastest growth in a year, but it passed the
cost of rising wage bills on to consumers, adding pressure on
the Bank of England to keep raising interest rates.
(Reporting by Shristi Achar A and Amruta Khandekar in
Bengaluru; Editing by Nivedita Bhattacharjee and Hugh Lawson)
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