Strong Sainsbury's fails to boost FTSE

Strong Christmas trading at Sainsbury’s buoyed its shares today but the wider London market wobbled after the Bank of England’s decision to hold interest rates.

The supermarket giant’s stock jumped 6% after it posted a 3.7% rise in like-for-like sales over the third quarter – emerging as one of the few success stories from the festive trading season.

But with investors disappointed by the Bank’s decision to keep borrowing costs at 5.5%, the FTSE 100 Index gave up earlier gains to stand 50 points lower at 6222.7 by the close – a fall of nearly 1%.

It added to a fall of 84 points yesterday as confidence on the high street took a hammering.

But the Sainsbury’s results were met with relief and helped its share price rise 23p to 388p. The retailer said more than 21.5 million customers shopped at its stores in the week before Christmas, helping drive the third-quarter sales.

It also led several other retailers back into the black during after they suffered in the wake of poor sales figures from Marks & Spencer yesterday.

Morrisons was up 1.25p to 308.5p on the back of the update, while B&Q owner Kingfisher put on up 4.3p to 119.6p, an improvement of nearly 4%.

But M&S continued sliding after a near-20% fall yesterday, ending the day 14.25p worse off at 395p – the lowest level for more than two years. And Argos owner Home Retail Group was also off 7.25p at 261.25p.

Elsewhere, attention was focused on British Energy after the Government gave the go-ahead for a new generation of nuclear power stations. The company, which operates eight nuclear power sites, is likely to be a beneficiary as the new facilities could be built on existing nuclear locations. Shares were 3.5p higher at 582p.

Transport operator FirstGroup – a newcomer to the Footsie – was high among the top flight fallers after guards and train drivers on its First Great Western franchise voted to strike. Shares fell 32.5p to 681.5p.

Housebuilder Taylor Wimpey was also under pressure after it reportedly told suppliers that it intended to pay them 5% less as a result of difficult trading conditions. A fall in sales reported by rival Redrow added to the gloom as Taylor Wimpey shares dipped 3% or 4.7p to 157.1p.

In the FTSE 250 Index, price comparison website Moneysupermarket.com shares slumped 13% following a downgrade from broker UBS. It has set a new price target of 155p, causing the company’s shares to fall 8.75p to 107p.

But insulation and roofing materials maker SIG topped the second tier’s gainers after announcing a big rise in underlying profits for 2007. Shares were up 7%, or 47p at 752p.

The four biggest Footsie risers were Sainsbury’s, up 23p to 388p, Kingfisher up 4.3p to 119.6p, Rexam adding 13.5p to 383.5p and Imperial Tobacco up 88p to 2752p.

The four biggest Footsie fallers were Tullow Oil down 33.5p to 594p, FirstGroup off 32.5p to 681.5p, HBOS down 29p to 647p, and Whitbread down 47p to 1082p.