Supermarkets in FTSE tug of war

Grocery giants Tesco and Sainsbury’s experienced contrasting fortunes after investors gained a clearer picture on recent holiday trading today.

Tesco shares slipped almost 3% – or 10.75p to 409.25p – after Christmas like-for-like sales of 3.1% came in below City expectations for growth of 4%. The update put recent figures from Sainsbury’s in a stronger light, with its shares up 10p at 389.25p as the supermarket also benefited from a broker upgrade.

The rest of the market was in downbeat mood while traders on both sides of the Atlantic braced themselves for a tough start to business in New York later today. By mid-morning, the FTSE 100 Index stood 73.8 points lower at 6141.9.

Morrisons tracked Sainsbury’s higher as analysts said the chain was likely to have been the sector’s strongest performer over Christmas. Shares were 4.75p higher at 308p, ahead of a trading update due later this month.

Taylor Wimpey was also higher for a while after a trading statement from the UK’s biggest housebuilder was met with relief in the City. While the company’s order book was down by 19%, the firm maintained its forecasts for 2007 profits. Shares responded with a rise of 5.1p to 177.6p but were later flat at 172.5p.

Elsewhere, renewed nationalisation fears at Northern Rock caused its shares to dive by as much as 20% today.

The mid-morning drop of 12p to 70.5p represented more bad news for shareholders, who were gathered in Newcastle for a meeting to vote on a series of recommendations aimed at protecting their interests during the crisis.

Among small cap stocks, Walkabout bar owner Regent Inns surged 56% after it said it had received a number of takeover approaches. Shares were 9.25p stronger at 25.75p, giving the company a market value of £29m.