By Helen Reid and Kit Rees
LONDON (Reuters) - Britain's top share index fell on Thursday as Reckitt Benckiser (L:RB) helped lead rate-sensitive consumer stocks lower, though a results-driven jump in AB Foods (L:ABF) and gains among banks offered some support.
Britain's blue-chip FTSE 100 (FTSE) index closed down 0.4 percent at 7,337.28 points among health and consumer staples shares fell. Both sectors are sensitive to interest rates changes.
More hawkish central bank comments and the minutes from the European Central Bank's latest policy meeting support the view that the ECB was open to a further step towards reducing stimulus.
Among consumer stocks, Reckitt Benckiser (L:RB) fell around 1.5 percent after cutting its growth forecast. The consumer goods giant was targeted in a worldwide attack which crippled computers at several multinational companies on June 27.
Research shows cyber-security breaches can erode companies' share prices permanently.
Mining stocks (FTNMX1770) also fell, dropping 0.9 percent, led by a 2.5 percent decline in Glencore's (L:GLEN) shares. Glencore giant signed a major cobalt deal with a Chinese firm.
Banks gained (FTNMX8350), since they would benefit from higher interest rates. Barclays (L:BARC), Royal Bank of Scotland (L:RBS) and Lloyds (L:LLOY) were rose between 1.5 percent and 2.4 percent.
AB Foods (L:ABF) rose 2.6 percent after reporting a better outlook thanks to an improved performance from budget clothing chain Primark. Marks & Spencer (L:MKS) followed it higher with a 1.3 percent rise, although Next (L:NXT) fell as it went ex-dividend.
"Some people have been thinking that the consumer is just going to go completely underground, but the evidence is that good companies that have the right offer at the right price can grow very strongly," said Jonathan Pritchard, retail analyst at Peel Hunt.
Investors and analysts expect British consumers to swap to cheaper goods as inflation rises, something that could help low-margin companies offering budget prices offset higher import costs as a result of sterling's weakness.
"AB Foods have found more mitigation than they expected and that's because they have got volume growth, which helps their bargaining position with suppliers," Pritchard said.
Merger and acquisition news drove gains on the small-cap index (FTSC), which outperformed larger stocks to close flat.
Novae Group (L:NVA) jumped up to 23 percent after the insurer agreed to be taken over by AXIS Capital (N:AXS), a Bermuda-based speciality lines insurer and reinsurer, for 468 million pounds ($605 million) in cash.
Top Novae shareholder Neptune said the offer undervalues the firm.