MARKS & SPENCER'S shares rallied higher after the retail giant insisted its under-pressure clothing arm was turning the corner.

The high street bellwether overcame a dip in profits and another fall in non-food sales after chief executive Marc Bolland claimed its fashion division was showing continued improvement, helping shares rise more than 4%.

But gloom over the European economy hit the wider FTSE-100 Index, which closed down 16.8 points at 6746.8. Frankfurt's Dax and Paris's Cac 40 were also in the red.

Latest forecasts from the European Commission showed the eurozone economy is still expected to decline by 0.4% over 2013 while growth for 2014 is expected at 1.1%, revised downwards from 1.2%.

But the EC underlined the gathering recovery in Britain as it more than doubled its UK growth forecast, predicting the economy will grow by 1.3% in 2013, compared with an earlier forecast of just 0.6%.

There was further economic cheer as industry survey figures showed the UK's dominant services sector grew at its fastest monthly pace for more than 16 years in October.

This gave the pound a boost, with sterling rising against most major currencies. It lifted one cent against the dollar to 1.60 US dollars and one cent against the euro to 1.19 euros.

In London, results from M&S showed that despite its recent high-profile Leading Ladies campaign featuring Dame Helen Mirren and a host of other top names, its fashion offering was still on a losing streak.

The retailer said clothing and homeware sales dropped 1.3% between July and September on a year earlier, but the fall was not as bad as the City had feared, and was an improvement on a 1.6% first-quarter decline.

Associated British Foods, which owns M&S rival Primark, moved in the opposite direction after it posted full-year results showing a 13% rise in underlying profits to £1.1 billion.

While Primark posted another "outstanding" performance, AB Foods said it expects a further reduction in profit from AB Sugar next year as EU sugar prices fall. Shares were 47p lower at 2208p.

More Than parent RSA Insurance was the biggest faller in the top flight after it cut its full-year guidance due to the impact of last month's storms, which it said would impact its bottom line by between £45 million to £65 million. Shares slid 8.1p to 121p.

Imperial Tobacco's full-year results helped shares climb 3%, or 72p, to 2382p. Despite a dip in revenues, profits were up and the dividend rose 10%.

The biggest FTSE 100 risers were Marks & Spencer, Imperial Tobacco, Antofagasta, 25.5p up at 889p and Anglo American, off 41.5p to 1536p. The biggest fallers were RSA Insurance, Persimmon, 52p lower at 1215p, Lloyds Banking Group, off 1.9p at 75.2p and Barclays, 6.2p weaker at 249p.