London’s main market made progress despite a tough time for the retail sector after the owner of catalogue chain Argos issued a gloomy warning over high street trading.
Good gains for US shares on Wall Street sparked the rally, with the benchmark Dow Jones Industrial Index rising as investors try to reverse a run of six straight days of falls caused by concerns over the health of the US economy.
Worries about the UK economy resurfaced after FTSE 250 Index company Home Retail Group, which also owns Homebase, revealed a 9.6% decline in like-for-like sales at Argos over the 13 weeks to May 28, sending its shares sliding by 13% or 27.1p to 175.2p.
The wider FTSE 100 Index rose by 17.8 points at 5826 even though other retail stocks in the top tier were also impacted by the Home Retail update.
Marks & Spencer dropped 5.1p to 366.1p, B&Q parent Kingfisher fell 1.85p to 272p and Primark owner Associated British Foods shed 6.5p at 1036.5p.
Home Retail is the latest group to issue a gloomy update after HMV, Mothercare and Dixons Retail all reported tough trade on the high street.
Dixons Retail plunged 9% in the FTSE 250, or 1.8p to 17.5p, after Argos said sales of consumer electricals were particularly weak.
JD Sports Fashion added to the uncertainty by reporting a deterioration in like-for-like sales, but said this was partly down to tough comparisons with the lead-up to the World Cup last year. Shares, which have enjoyed a strong run in recent months, were 59.5p lower at 924p, a fall of 6%.
But Halfords bucked the trend by reporting a strong start to its new financial year, with like-for-like sales up 0.8% after the weather boosted demand for bicycles and camping gear. Shares jumped 3%, or 11p to 409p.
Lloyds Banking Group hit the top of the fallers’ board with a drop of more than 2% after reports said the bank was considering setting up a separate bank and floating it on the stock market if an auction of 600 branches fails. Shares were down 1.1p at 47.6p.
The banking sector was also under pressure after business secretary Vince Cable yesterday said banks could face further taxes if they fail to lend to small businesses at the level set out in Project Merlin.
Royal Bank of Scotland was down 0.7p at 40.7p while Barclays fell 4.1p to 259p.
Miners offered offered some support after a turbulent week as Antofagasta reversed yesterday’s losses to stand 16.5p higher at 1242.5p.
Meanwhile, rising oil prices – Brent crude stood 0.2% higher at 117 US dollars a barrel – lifted the oil and gas sector. BP was up 2.3p at 446.8p, Cairn Energy was 1.7p ahead at 422.9p and Petrofac advanced 6p to 1533p.
Engineering group Weir topped the risers’ board after reports said Chinese authorities have issued £1m fines to two companies making illegal copies of Weir pumps. Shares were up more than 3% or 64p at 1997p.