FTSE loses ground

The London market dropped below the 5700 barrier today as strong Christmas trading at Marks & Spencer failed to shield the retailer from profit taking.

M&S shares could not hold on to the £5 (€7.30) mark that was reached in the run-up to today’s update, which outlined a 2.9% rise in like-for-like sales during the 13 weeks to New Year’s Eve.

With mining stocks under pressure and reports that one of the investors in speciality chemicals firm Johnson Matthey is selling 5.5 million shares, the FTSE 100 Index declined by 33.1 points to stand at 5698.4 by mid-morning.

The decline for M&S – off 9.5p to 492.5p – came as analysts questioned how much further the stock could rise especially after chief executive Stuart Rose flagged rising costs and his belief that it was too soon to say the high street had turned a corner.

Other retailers fared better after surprise figures from the British Retail Consortium revealed the best Christmas season in four years. Next lifted 7p to 1680p, Tesco added 2.25p to 321.5p and Boots cheered 7p to 629.5p.

But there were contrasting fortunes for operators of high street stores outside the top flight where Alexon weakened 3% or 6.75p to 221.5p after sales fell and it was left with an unexpectedly large amount of unsold stock.

However, computer games specialist Game Group surged by more than 6% – up 4.75p to 83.25p – after an improved supply of Sony PSP consoles enabled it to outstrip sales expectations and raise profits forecasts to at least £8m (€11.6m).

Back in the top flight, shares in P&O continued to change hands for more than the price agreed between the ports group and suitor Dubai Ports World.

Reports today said that three hedge funds have made substantial bets that Singaporean firm Temasek will launch a counterbid, contributing to P&O rising 6.75p to 463.75p. DP World has tabled an offer worth 443p a share.

But news that investment bank Goldman Sachs was placing 5.5 million shares in Johnson Matthey sent the chemicals maker to the top of the Footsie fallers board - off 40p at 1396p.