A strong session for retailers after Home Retail Group raised its profits guidance failed to keep the London market in positive territory today.
The FTSE 100 Index was 20.8 points lower at 5619.7 as a surge in Chinese inflation raised fears that Beijing officials will have to do more to prevent the country’s economy from overheating.
The potential impact on growth prospects meant mining stocks were under pressure, with Xstrata down 26p at 1184.5p and Kazakhmys off 44p at 1501p.
The main cheer in a lacklustre session came from the retail sector after Argos and Homebase owner Home Retail Group made its second increase to guidance in less than three months, causing its shares to rise by 4.8p to 272.6p.
Analysts said cost cuts and better than expected margins at the Argos business lay behind the upgrade to £290m (€319m) for the year to the end of February.
And while Home Retail’s sales were under pressure due to the weather, other retailers drew encouragement from the figures as Marks & Spencer lifted 5.8p to 354.9p, Next added 52p to 2030p and B&Q owner Kingfisher rose 4.4p to 221.1p.
They were joined on the risers board by Thomas Cook after the travel giant’s investor day prompted analysts at Panmure Gordon to maintain their positive stance on the blue-chip stock.
Shares were 6.2p higher at 246.6p.
Elsewhere, shares in Friends Provident owner Resolution rose nearly 1% despite it losing its place in the FTSE 100 Index following the latest reshuffle.
The business, which floated in 2008, will be replaced by Investec, down 9p at 530p. The change is due to take place at the end of this month.
Among companies reporting results, supermarket chain Morrisons failed to benefit after a strong set of full-year figures showed a 21% rise in profits to £767m (€844m).
Shares slipped 2% or 5.7p to 298.5p as analysts noted the company’s more cautious outlook comments on trading in 2010.
Meanwhile, JD Wetherspoon shares were up 3% or 13.5p to 518.5p after it reinstated its dividend in the wake of a 17.5% rise in underlying half-year profits to £36.2m (€39.8m).
Also in the second tier, shares in support services firm Connaught rose 3.6p to 306.1p, as traders digested reports of potential bid interest from 3i.
Waste disposal group Shanks moved in the opposite direction, down 2.2p to 106.2p after private equity firm Carlyle confirmed it was no longer interested in bidding for the firm.