Footsie fails to rally

Retail stocks put the brakes on hopes of another stock market rally today after investors took fright at a less than inspiring update from Next.

By lunchtime, the FTSE 100 Index was down 25.6 points at 3879.6 after failing to hold on to marginal gains earlier in the session.

Retailers – already under pressure after a CBI survey suggested the spending boom may be cooling – went into reverse for a second session in a row.

They were led by high street giant Next, which reported a slide in underlying sales growth because of warm weather and weakened consumer spending.

From the year end of July 28 to October 2, it reported that like-for-like sales across 274 of its stores had edged ahead 1%.

Shares in the group dived more than 8%, or 74.5p to 805.5p, while others on the slide including Argos retailer GUS, down 17p at 508p, Marks & Spencer off 17.75p at 294.25p and Dixons 5.5p lower at 162.5p.

Supermarkets were also slipping, with Tesco down 6.5p at 199p, Sainsbury’s off 6.5p at 273.75p, Safeway down 8.75p at 199.25p and Morrison’s off 3.25p at 214.25p.

But the London market was at least holding steady after a volatile few days in which swings of more than 100 points have become the norm.

Analysts said today’s more measured movement reflected uncertainty about the direction for Wall Street markets after both the Dow Jones Industrial Average and tech-laden Nasdaq closed lower last night.

Speculation that a rogue trade on the New York Stock Exchange may have exacerbated last night’s falls made calculating today’s progress harder.

Back in London, banking stocks, which fared well in yesterday’s bullish run, were on the back foot.

Lloyds TSB lost 15.5p at 496.5p, Barclays was down 13.75p at 402.75p and Abbey National fell back 6.5p at 551p.

Among those making ground included mobile phone group Vodafone after it emerged it may consider a share buyback if it failed to raise its stake in French telecoms group Cegetel.

Shares rallied 1.75p to 91.75p while rival mmO2 struggled – down a penny at 46p – and Cable & Wireless eased another 2p to 126.75p.

In the FTSE 250 Index, retailer New Look fell victim to weakness in the sector as it lost early gains to fall 5p to 252p.

The decline came despite a strong half-year update that prompted some analysts to raise their full-year profits forecasts.