Retail rally but FTSE lacks spark

Retailers including Next and Marks & Spencer rallied today on hopes the sector could see positive sales growth in the second half of the year.

An upbeat note from Citigroup yesterday pointed to potential encouragement from a rapid improvement in consumer cashflows and weak comparatives with a year earlier.

The retail gains were the highlight of another lacklustre session for the wider London market, with the FTSE 100 Index down 25.3 points at 4133.3 by mid-morning.

The Footsie had gained yesterday on the back of a surprise decision by the Bank of England not to expand its quantitative easing programme, a move taken as a sign that an ailing UK economy was in no need of further immediate aid.

However, a tepid session on Wall Street cooled London’s enthusiasm while energy heavyweights BP and Royal Dutch Shell were under pressure after the price of oil slipped below 60 US dollars a barrel. The pair fell 5.05p to 460.2p and 11p to 1448p respectively.

Miners were also lower, although the fall for Anglo American was limited to under 1% after the company impressed investors with the appointment of City heavyweight John Parker as its new chairman. Shares were off 6p at 1644.5p.

In the retail sector, Argos owner Home Retail Group gained for a second successive session following the Citi note. Shares were 9.25p higher at 275.75p, while Next was up 29p at 1598p and B&Q firm Kingfisher added 3.3p to 189.8p.

Marks & Spencer was 4.5p higher at 318.25p and Tesco rose 3.8p to 352.5p.

Outside the top flight, shares in roofing and insulation group SIG made a strong start after it said there had been no further deterioration in trading conditions since last month. Shares climbed 2% but were later unchanged at 88p.