London market continues to slide

Confidence in high street retailers sagged further today as a string of disappointing updates sent London shares spinning backwards.

Supermarket group Morrisons was the heaviest blue-chip faller on a day when the British Retail Consortium claimed retailers had suffered their worst Christmas in 10 years.

With an equally gloomy set of earnings forecasts hurting sentiment across the Atlantic, London traders found few sources of inspiration and the FTSE 100 Index closed 22 points lower at 4818.7.

Shares in Morrisons fell nearly 6% or 12p to 203.5p after it became the latest retailer to fail to impress investors with its Christmas trading.

The company said a 0.1% rise in like-for-like sales in the six weeks to January 9 was little more than “acceptable”, although its converted Safeway stores had performed well.

Peacock added to the downbeat mood with a profits warning and Topps Tiles also fell after saying it may not be able to sustain recent growth.

The updates were released within hours of the British Retail Consortium announcing that high street sales in December were lower than 2003 on an underlying basis.

The BRC dubbed this Christmas “the worst for 10 years” and the outlook on the high street was clouded by uncertainty over the economy and the housing market.

Several top-flight retailers were dragged down by the negative sentiment generated by the BRC survey and the Morrisons update with Next off 3p to 1600p, and Sainsbury’s, down 3.75p to 266.5p ahead of Thursday’s third quarter results.

In the FTSE 250 Index, Peacock fell 11% or 28.5p to 243p and Topps Tiles dropped 7.5p to 251.5p after warning it may have trouble keeping up with its fast pace of like-for-like sales growth.

Discount retailer Matalan eased 2p to 224p despite saying the benefits of a recent overhaul were helping to overcome difficult market conditions.

Cairn Energy topped the Footsie risers board with a 4% or 40p gain to 1088p after saying it had made a new gas discovery in Rajasthan and it was scouting for more oil and gas nearby.

Builders merchant Wolseley was in the red, down 12.5p to 971p, after saying it planned to spend £100 million on two new distribution centres to bolster its UK operation.

Elsewhere, Game Group lifted 7% or 4.5p to 66.5p as investors expressed relief that a 20.4% sales drop over Christmas had not been worse and that a rapid change in its trading strategy had worked.

Bovis Homes was also on the up after re-injecting hope into the housebuilding sector following yesterday’s downbeat statement from rival Taylor Woodrow. Shares advanced 13.5p to 584.5p as it forecast record profits for 2004.

The highest Footsie climbers were Cairn Energy, up 40p to 1088p, Boots ahead 16p to 662p, BHP Billiton up 12p to 603p and Xstrata ahead 15.5p at 884.5p.

The heaviest fallers were Morrisons down 12p to 203.5p, Man Group off 48p to 1372p, Legal & General down 3.5p to 114p and Friends Provident off 4p to 160.5p.