Supermarket chains prop up FTSE

Supermarket chains breathed fresh life into London shares today after higher oil prices had prompted a lacklustre start to trading.

Shares in Sainsbury’s surged 4% in the wake of a report that a former operations director at Safeway had been recruited to sort out problems in its supply chain.

A positive broker note on Morrisons pushed it into second on the risers board as the FTSE 100 Index moved 13.7 points ahead to 4515.7 by mid-morning.

Investors had earlier taken fright at oil prices climbing back above $44 a barrel, with the Footsie sliding 14 points into the red before beginning its recovery.

Sainsbury’s advanced 11.25p to 269.25p after the Financial Times reported that the struggling supermarket group had recruited Lawrence Christensen to support chief executive Justin King’s recovery drive.

It was followed by Morrisons, up 4.5p at 186p, after brokers Smith Barney said proceeds from the sale of Safeway stores could be higher than previously thought.

On a busy day for corporate news in London, spirits group Diageo led the list of Footsie fallers after reporting tough trading conditions in Europe.

Diageo said the introduction of a smoking ban in Ireland and a tax on alcopops in Germany weakened demand for many of its key brands, which include Guinness and Smirnoff vodka.

Its shares were off more than 4% or 27.5p to 656p and dragged down rival Allied Domecq, which fell 3.5p to 444.5p.

Whitbread was down 32p at 784.5p after revealing a sales slowdown over the past 11 weeks in all areas of its business except its Travel Inn budget hotels.

Elsewhere, clothing retailer Matalan advanced 2.5p to 210.5p after saying it had made encouraging sales progress in the first half.

Telecoms group Marconi gained 0.5p to 585.5p after saying it had wiped out the debt left over from its life-saving restructuring.