FTSE up despite retail concerns

There was further stock market pain for retailers today after Marks & Spencer sent a chill through the sector with warnings over the trading outlook.

There was further stock market pain for retailers today after Marks & Spencer sent a chill through the sector with warnings over the trading outlook.

M&S reported an 8% rise in like-for-like sales over the festive period, but this was slightly below City expectations and combined with cautious comments from boss Stuart Rose to hit shares hard.

The wider London market held steady, with the FTSE 100 Index closing up 7.5 points at 5530.

The pound shrugged off fears surrounding a potential call for a secret ballot to oust Prime Minister Gordon Brown, with sterling up 0.2% to US$1.60 and down marginally at €1.11.

Retailers were the stocks in focus on London's Footsie today after the M&S update and as the snow promised to keep shoppers away from Britain's high streets.

M&S shares, which have risen 10% since the end of October, slid 7% to close 27.5p down at 377.4p as the retailer's executive chairman Rose warned that trading will remain challenging this year.

Sales also disappointed, despite returning to positive like-for-like growth for the first time in more than two years and even though the company pointed out that the period excluded the first day of its post-Christmas sales.

A number of other retailers were also under pressure. Homebase and Argos owner Home Retail Group declined 6.4p to 283.5p, while B&Q firm Kingfisher dropped 3.4p to 230p and supermarket giant Tesco slipped 8.4p to 412.05p.

Sainsbury's fell 1.9p to 318p ahead of a trading update tomorrow.

Next, which triggered the retail sell-off yesterday following its own cautious comments about 2010 trading, recovered 1p to 2101p.

In the FTSE 250 Index, M&S food supplier Northern Foods tracked the retailer lower with a fall of 2.85p to 69.05p. Country Life and Utterly Butterly maker Dairy Crest also dropped 18.7p to 355.3p.

On the risers board, Royal Bank of Scotland maintained its recent strong run with a gain of 1.28p to 36.68p. With a recent broker upgrade boosting sentiment, Barclays added 8.9p to 307p and Lloyds Banking Group rose 0.56p to 54.59p.

There was some cheer in the retail sector after Domino's Pizza UK & Ireland and Majestic Wine both delivered trading updates ahead of expectations.

The pizza delivery firm rose 4.7p to 305.3p after it reported an 8.6% rise in like-for-like sales and said it continued to open stores at a record rate.

Investec Securities said it expected to make a 5% increase to its full-year forecasts following the bullish trading update.

Majestic Wine was 6% higher, up 12.5p at 227.5p, after it said a recent adjustment in its minimum purchase policy had boosted Christmas sales.

In September, Majestic lowered the limit from 12 to six bottles in an attempt to broaden its customer base - particularly in towns and cities, where people are more likely to walk to its stores instead of driving.

The biggest Footsie risers were Autonomy ahead 90p at 1560p, Wolseley up 61p at 1361p, Royal Bank of Scotland up 1.28p at 36.68p and Xstrata up 41p at 1229p.

The biggest Footsie fallers were Marks & Spencer down 27.5p at 377.4p, British Land off 12.1p at 457.9p, Petrofac down 26p at 1005p and Segro down 8.5p at 343.4p.

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