FTSE down more than 20 points

The UK retail sector’s new-year hangover continued today despite a positive festive trading performance from supermarket chain Sainsbury’s.

Next and Marks & Spencer extended their poor run as shares in both firms fell a further 2% on fears that the high street faces a bleak 2010.

The mood of caution was reflected in the FTSE 100 Index, which fell 20.9 points to 5509.1 ahead of the publication of US jobs figures on Friday.

As well as Next and M&S – down 49p to 2052p and 6.9p to 370.5p respectively - miner Xstrata lost 26p to 1203p and Royal Bank of Scotland eased 1p to 35.7p.

The market’s only comfort came from the supermarket sector after Sainsbury’s delivered third quarter trading figures at the top end of expectations.

Shares were more than 2% higher – up 7.5p to 325.5p – after the company reported a 4.2% rise in like-for-like sales amid record Christmas trading.

As well as the rise for Sainsbury’s, market leader Tesco climbed 1.15p to 413.2p and Morrisons lifted 4.2p to 280.6p.

The risers board was topped by building supplies firm Wolseley, which climbed 33p to 1394p after broker UBS raised its guidance on the blue-chip stock.

Outside the top flight, housebuilder Persimmon made progress after it said forward sales at the start of 2010 were up 40% on a year earlier. Shares rose 5% or 25.1p to 494.1p as the firm also reported a better second half of 2009 and the Halifax said house prices rose by 1% during December.

Others in the sector on the front foot included Barratt Developments, which gained 6.3p to 138.3p.

Elsewhere, JD Sports Fashion surged 10% after another strong performance left it course to significantly exceed market expectations. Shares were 57.5p higher at 607.5p.