Retail sector drags Footsie down

Further bleak news from the retail sector sent a clutch of famous high street names into negative territory on the London market today.

Further bleak news from the retail sector sent a clutch of famous high street names into negative territory on the London market today.

The gloom, which stemmed from trading updates by Matalan and HMV, ensured the FTSE 100 Index stood eight points lower at 4853.2 by mid-morning.

Among the retailers catching a cold, Marks & Spencer shares dipped 3p to 340.5p while Boots was down 9p to 591p and Argos owner GUS off 10.5p at 842p.

The downbeat mood was set by FTSE 250 Index stock Matalan, which announced an 8.8% fall in like-for-like sales for March and April, adding that it was currently on course to post results at the bottom end of market expectations.

Shares fell 2% or 3.75p to 189.25p, although the decline was checked by the better-than-expected price achieved on the sale of Matalan’s jeans business Lee Cooper.

HMV fell 4.25p to 223p as it said same store sales weakened by 2.2% in the 14 weeks to April 30. Despite the recent sales drop, the owner of the Waterstone’s book shop chain said it remained on track to meet profits hopes.

Earlier, the Dow Jones Industrial Average closed marginally ahead as the Federal Reserve’s decision to raise the cost of borrowing to 3% took few commentators by surprise.

Among other major moves in London, tobacco group BAT topped the Footsie risers board after announcing first quarter profits had risen by 8.5%, following good growth across most of its businesses.

Shares gained by more than 2% or 23.5p to 997.5p. Rival Gallaher followed suit, adding 7.5p to 816.5p.

Telecoms equipment group Marconi was also closely watched after its failure to land a major BT contract resulted in a 50% fall in the share price on Thursday and Friday. The stock recovered some of the lost ground yesterday and was 3p higher at 284p today.

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