FTSE up despite retail sector decline

Marks & Spencer sparked a share slide for major British retailers today after the high street giant said profits plunged 40% and cut its shareholder payout.

M&S led declines across the sector with a fall of more than 8% as its dividend cut - the first since 2000 - disappointed investors.

However, the wider market saw another close in positive territory - up 35.8 points at 4482.3 - after banks rose in response to reports the British government is mulling a sale of its shares in part-nationalised Lloyds Banking Group and Royal Bank of Scotland.

The Footsie's advance came despite figures showing the Retail Prices Index measure of inflation fell to the lowest level ever recorded last month, while the official Consumer Prices Index measure dropped further towards the Bank of England's target.

Meanwhile, the pound rose to its highest level against the US dollar this year, with modest gains also made against the euro.

A positive start to trading on Wall Street also helped boost sentiment, with the Dow Jones Industrial Average ahead by another 0.3% in the first couple of hours.

Marks & Spencer led London's FTSE 100 fallers board as shares slumped after it said it would lower its final dividend by 33% to 9.5p a share.

The move, which was made to conserve cash amid testing conditions, saw M&S shares down 27.5p to 311.75p.

High street rival Next joined it among the top losers, losing 32p to 1526p, as it also received a warning shot from shareholders today at its annual general meeting after softening the rules on director bonus payouts.

The firm's remuneration report failed to win backing from almost one in four shares that voted.

Tesco also eased - down 4p at 355.8p - while Morrisons fell 3.5p to 246p.

The downbeat mood in the retail sector was also impacted by Burberry's 13% fall in annual underlying profits, causing its shares to drop 5.5p to 395.75p in the FTSE 250 Index.

Back in the top flight, bank shares rallied after the Financial Times said the UK government had begun sounding out sovereign wealth funds and other investors about selling stakes in its part-nationalised banks.

RBS rose 1.8p to 43.1p and Lloyds added 2.3p to 100.3p.

Confirmation of Great Portland Estate's rights issue aimed at funding cut-price acquisitions put the property sector on the front foot today.

The firm proposed the fundraising designed to net around £166 million to invest in cheap London properties in the recession. Great Portland shares jumped 21.5p to 315p in the FTSE 250, while Land Securities gained 30.5p to 519p in the top flight and British Land rose 22.5p to 422p.

First Choice and Thomson holidays firm TUI Travel saw shares drop 4.5p to 253.25p after it reported a £333m (€378.6m) half-year loss.

The biggest Footsie risers were Anglo American up 112p at 1600p, Aviva ahead 23.75p at 349.75p, Land Securities up 30.5p at 519p and Legal & General up 3.6p at 65p.

The biggest Footsie fallers were Marks & Spencer down 27.5p to 311.75p, Vodafone off 5.05p to 122.4p, Cairn Energy down 59p at 2395p and Next down 32p at 1526p.