Tesco shares slump sets tone for FTSE

The UK’s biggest supermarket chain saw its shares slump more than 3% today after its latest sales figures disappointed the City.

Tesco was the London market’s leading faller, down 15p at 441.75p, after the company revealed like-for-like UK sales growth of 4.7% – lower than the 5.2% expected by investors – amid slower consumer spending.

The disappointing figures clouded sentiment over the retail sector and saw the FTSE 100 Index give back earlier advances to stand 9.9 points down at 6693.6 by mid-morning.

Other retail fallers in the wake of the Tesco figures included Marks & Spencer, off 13.5p at 674p, Next down 19p at 2137p and Sainsbury’s – due to update on its own performance tomorrow – off 5.5p at 578p.

Broker upgrades and continued takeover excitement helped buoy the Footsie’s main risers.

Outsourcing firm Capita was the leading share, up 19.5p to 753.5p – nearly 3% - on a positive note from Citigroup over the prospects for its insurance division.

And Dulux paint maker ICI built on its 16% rise in the previous session after the firm rejected a £7.2bn (€10.7bn) approach from Dutch rival Akzo Nobel, as investors bet on a higher offer. The stock was ahead nearly 1%, or 4.5p, at 639p.

Miners were also in favour amid renewed talk of sector consolidation. Antofagasta was ahead 6p at 625p, Rio Tinto up 43p at 3934p and Lonmin up 13p to 4190p.

But among the fallers confectionery and beverages giant Cadbury Schweppes’ plans to cut 7,500 jobs worldwide and close 15% of its confectionery sites failed to impress investors. The shares were down almost 1%, or 5p, at 701p.

In the second tier, a helpful note from broker Cazenove gave retailer WH Smith a push, lifting the company nearly 3%, or 11.75p, to 424.5p.