Footsie up despite slow Christmas sales

The London market staged a late rally today to overcome dismay at the worst Christmas sales data for more than 20 years.

Shares in retailers Kingfisher and Dixons were among those out of favour with investors after an ONS report showed retail sales falling 1% in December compared with the previous month.

But fresh confidence in the growth prospects for mining stocks and broadcasters kept the FTSE 100 Index above the waterline, closing 2.5 points higher at 4803.3.

Analysts said the poor December sales underlined the challenge facing retailers at the start of 2005, with competition becoming fiercer and UK retail spending on the wane.

Hopes that the poor sales data might encourage the Bank of England to cut interest rates were dampened last night by its governor, Mervyn King, who attached more importance to the longer-term trend in spending.

Sentiment towards equities was also fragile across the Atlantic where the Dow Jones Industrial Average crept 12 points into the black after the opening bell.

A disappointing week for US earnings reports led by online auctioneer eBay has encouraged many traders to sit on their hands, while the US Federal Reserve is expected to raise interest rates by 0.25% when it meets next week.

Geoff Langham, head of trading at deal4free.com, said a more aggressive move by the Fed such as half-point rise would have quite a pronounced impact on UK shares.

In London, hopes of another strong year for mining stocks helped prop up the market after investors sent Antofagasta up 12p at 1142p and Rio Tinto 44p higher at 1620p. Steel giant Corus was close to the top of the Footsie risers board on speculation of another jump in steel prices, rising 1.25p to 53.25p.

The perception of ITV as a potential takeover target helped the broadcaster to become the day’s highest riser with a 3.25p gain to 117.25p, while BSkyB jumped 12p to 552.5p as investors bought into the stock ahead of a trading update next month.

National Grid Transco lost earlier gains achieved after energy regulator Ofgem gave its conditional approval to the sale of four of its gas distribution networks. The process is expected to lead to a return of cash to shareholders, although shares fell back a penny to 505.5p today.

Kingfisher was the largest loser in the retail sector following publication of the ONS figures, fading 4.25p to 305.25p, while Dixons dropped 1.5p to 159.25p and Marks & Spencer fell 2.75p to 353p.

Wolverhampton & Dudley Breweries was also in negative territory, even though it told investors that trading had been in line with expectations. Share were off 7p at 1122p.

In one of the few corporate announcements of the session, soft drinks group Nichols rose 2p to 163.5p after buying the Panda brand from privately-owned family brewer Hall & Woodhouse. Panda has annual sales of around £11.5 million.

The day’s biggest winners were ITV, up 3.25p to 117.25p, Rio Tinto advancing 44p to 1620p, Corus Group lifting 1.25p to 53.25p and Shell adding 10.5p to 456p.

Largest losers were Amvescap, down 7.25p to 311.5p, Schroders off 13.5p to 746.5p, Hays dipping 1.75p to 120.25p and Kingfisher retreating 4.25p to 305.25p.