The London market suffered a late sell-off today after the United States said its trade deficit had ballooned to a record $61bn (€47.4bn) in February.
With shares on Wall Street going sharply into reverse, the FTSE 100 Index suffered a similar fate to double early losses and move 27 points lower to 4946.2 by the close.
The trade deficit in the US switched the spotlight away from the retail sector, where Tesco and Marks & Spencer suffered contrasting fortunes at the hands of investors today.
Investors cut their exposure to supermarket giant Tesco after its £2bn (€2.9bn) profits haul – the first by a UK retailer – was overshadowed by cautious comments on future growth.
Tesco faded 0.25p to 318.5p as sentiment towards the firm cooled after it flagged rising costs and predicted a “more normal” year of trading ahead. Some analysts said the dip reflected the fact that the City had become used to Tesco exceeding expectations.
In contrast, Marks & Spencer led the Footsie risers after predicting that 2005 profits would be at the high end of expectations even though sales fell again in the fourth quarter.
Investor relief at the trading update by M&S helped to explain why the retailer lifted 4% or 13.75p to 354.75p, with analysts noting that it was carrying 30% less stock than a year ago.
Traders used the updates to look again at rivals such as Sainsbury’s, which added 0.75p to 298p, Morrisons which put on 0.25p to 198p and Dixons up 0.25p to 152.25p.
Investors continued to baulk at the possibility that the Royal Bank of Scotland might spend more than £2bn (€2.9bn) on a 20% stake in Bank of China, with RBS shares falling a further 15p to 1655p today after sliding nearly 2% in the previous session.
It proved to be a bad day for the financial sector all round as HBOS weakened 8.5p to 828.5p and Northern Rock dropped 5.5p to 799p.
Drug makers were suffering from a dearth of blue-chip buyers with AstraZeneca down 3p at 2178p, GlaxoSmithKline falling 11p to 1225p and Shire Pharmaceuticals off 3p at 608.5p.
Elsewhere, Tullow Oil was close to the top of the FTSE 250 fallers as it reported that profits had trebled, but forecast a year of consolidation. Shares were 4%, or 7p, lower at 183p.
Manchester United advanced 2p to 269p after the Daily Express said US sports tycoon Malcolm Glazer would finally deliver his £800m (€1.2bn) takeover bid this week.
And hand dryers-to-office pot plants group PHS cheered 2% or 2p to 88.5p after putting investors on standby for pre-tax profits in the region of £47.5m (€69.5m), maintaining its record of growth since floating in 2001.
The highest Footsie risers today were Marks & Spencer up 13.75p to 354.75p, Hanson rising 16p to 500p, Scottish & Newcastle up 9.5p to 487p and Rexam up 3p to 487p.
The heaviest fallers were Cable & Wireless down 3.5p to 128.25p, Rolls-Royce Group off 5.25p to 248p, O2 down 2.25p to 121.25p and WPP Group off 11p to 608.5p.