The FTSE 100 Index held on to its New Year rally today as retail cheer helped offset more bad news for the economy.
Christmas trading updates from Next and Debenhams eased nerves in the retail sector and helped the FTSE secure its sixth straight day of gains.
Oil prices surging through the $50 (€37) a barrel level at one stage also gave commodity stocks a boost, which contributed to the FTSE 100’s 59.3 point advance to close at 4638.9.
Blue chips were able to shake off further economic gloom, after the Nationwide said house prices fell by 15.9% during 2008 in the biggest annual drop on record.
Survey data also confirmed that firms in the services sector are shedding jobs at a record rate after further sharp falls in output and turnover.
But disappointing economic readings on US home sales and factory orders did lead to a subdued start to trading on Wall Street, which in turn pared back gains of 2% at one point on the FTSE.
Next saw double digit gains regardless, up 12% in the top flight, while FTSE 250 stock Debenhams surged 20% as investors breathed a sigh of relief at the pair’s sales figures for the all important festive period.
Next shares jumped 136p to 1227p after it held profit forecasts in line with previous guidance and reported a good start to New Year sales.
Argos owner Home Retail Group added 16.5p to 230p, while Marks & Spencer was 8.75p higher at 238.75p ahead of its own trading update tomorrow.
But FTSE 250 stock Debenhams was the sector’s star performer after the department store chain limited its like-for-like sales decline to 3.5% and said profits rose in the 18 weeks to January 3. Shares have been battered by trading and debt concerns, but responded to today’s update with a gain of 5.75p to 34.25p.
Homewares firm Dunelm joined the retail rally as it reported a 5.6% fall in like-for-like sales but said it had held its margins by avoiding unplanned promotions. Shares were 11% or 14p higher at 144p.
Other retailers outside the FTSE included Currys and PC World owner DSG International, which surged 17% or 3p to 21p. And JJB Sports continued its recent recovery with a rise of 5.4p to 14p.
Back in the top flight, miners added to the blue chip advances, with Xstrata the biggest gainer in the sector, ahead 106.5p at 899.5p.
Fund manager Man Group was also a top gainer after a series of positive broker notes, including from Evolution, lifted the stock 17% or 42.5p to 287p.
But banks were suffering in the wake of yesterday’s downbeat outlook from Deutsche Bank and the Financial Services Authority’s decision not to extend the ban on short-selling when it expires next Friday.
Lloyds TSB was the biggest loser, down 5%, or 6.7p to 119p, followed by HSBC off 21.25p at 657.75p.
The biggest FTSE risers were 3i Group up 59.75p at 342.25p, Man Group ahead 42.5p at 287p, Xstrata up 106.5p at 899.5p and Next up 136p at 1227p.
The biggest fallers were Lloyds TSB down 6.7p at 119p, Serco Group off 20.25p at 464.5p, Johnson Matthey down 42p at 1079p and Bunzl down 19.5p at 592p.