FTSE dips below 5000 mark

Retailers weighed on the London market today as the FTSE 100 Index failed to hold its position above the 5000 barrier.

Retailers weighed on the London market today as the FTSE 100 Index failed to hold its position above the 5000 barrier.

The declines for a number of high street heavyweights came despite largely positive news from supermarket chain Morrisons and Argos owner Home Retail Group.

The top flight opened 10 points higher in the first hour of business but then retreated to stand 20.5 points lower at 4983.8 by mid-morning.

London's FTSE 100 has bounced back 44% from the six-year lows seen in March and is now 200 points short of its level on the day the collapse of Lehman Brothers threw the world's financial system into crisis.

Economic recovery hopes and a recent revival in takeover activity - such as Kraft's £10.2bn (€11.6bn) bid for Cadbury - have encouraged investors.

But the mood in the retail sector was more cautious, despite a further rise in profits at Morrisons and an upgrade to earnings guidance from Home Retail.

Morrisons shares fell 6.5p to 278p after the company predicted that market growth in the second half of the year would ease to "small single digit numbers" on the back of lower food prices.

Home Retail shares were 6% lower, down 21.1p at 308.6p, as a trading statement for the second quarter showed further margin pressure, offsetting continued like-for-like sales progress at Homebase and Argos.

Other retail fallers included Next, which fell 66p to 1681p, and B&Q owner Kingfisher with a decline of 8.1p to 207.8p. Marks & Spencer was off 8.5p at 355.6p.

Travel stocks posted the biggest gains in the Footsie after banks owning 43.9% of Thomas Cook completed a placing of shares with institutional investors. The placing ended uncertainty over future ownership of stock, which was owned by lenders to collapsed German retailer Arcandor.

Thomas Cook shares climbed 10.1p to 255.1p and TUI Travel added 12.8p to 269.5p.

In the FTSE 250, shares in Kesa Electricals suffered amid the retail sector woe, even though the company posted market-busting figures for its Comet chain. Shares were 7.2p lower at 144.4p.

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