By Simon Kennedy, MarketWatch
LONDON (MarketWatch) -- Stocks in London fell Thursday, led
lower by Tesco PLC as the retailing giant issued a disappointing
sales update.
By contrast, Home Retail Group PLC rallied after the firm's
strong performance over Christmas.
The benchmark FTSE 100 index slipped 0.4% to 6,023.88.
Stocks showed little reaction to the Bank of England leaving
interest-rate policy and its asset-purchase program unchanged, as
expected.
"We have seen blue-chip shares in London firmly knocked back
today, as the retail reporting season has continued," said David
Jones, chief market strategist at IG Index. "After some
better-than-expected results from high street favorites this week,
the latest numbers from Tesco have proved disappointing."
Tesco's shares dropped 4.3%, pressured after the world's
third-largest retailer said recent bad weather in the U.K. caused
disruption for customers trying to reach its larger stores.
Total sales in the six weeks to Jan. 8 rose 7.6% excluding fuel,
but comparable U.K. sales were up just 0.6%, the company said.
Jefferies International analyst James Grzinic said in a note to
clients that Tesco's comparable sales growth has lagged behind
other supermarkets over the Christmas period, mainly due to a much
stronger performance from J Sainsbury PLC .
Shares of Sainsbury ended down 0.1% Thursday.
Big moves for specialty retailers
Among several other smaller retailers that also provided
Christmas trading updates, Dixons Retail PLC took a knock, its
shares slumping 10%. The electrical-goods chain reported decreases
of 2% in comparable sales for the group and 4% for its U.K.
business.
Home Retail , on the other hand, jumped more than 10%. Pretax
profit for the year should still hit the middle of its previously
announced range pegged at 250 million pounds ($394 million) to
£275 million, the company said.
Seymour Pierce analyst Freddie George said that Home Retail
didn't appear to have been hurt by the bad weather and that
decreasing sales for its Argos division were less severe than
expected.
Game Group PLC was another standout performer, surging nearly
16%. The computer-game retailer said sales trends are continuing to
improve.
In addition, Game Group said it will provide a strategic update
in February on how the company will adapt to innovations including
social and mobile gaming as well as the growth in digital
distribution.
Also Thursday, there were several other big movers in London
outside the retail sector.
Shares of Provident Financial PLC jumped 11% after the
door-to-door lender entered into a new £100 million loan
facility, which analysts said removes short-term funding
concerns.
Filtrona PLC rallied 9.7% after appointing a new chief executive
and saying revenue for the year was up around 10%. Panmure Gordon
upgraded the specialty plastics supplier to buy from hold following
the statement.
In other sectors, mining stocks edged down after their recent
strong gains.
Rio Tinto PLC (RIO) shares slipped 0.9%. The group's Alcan
division declared a force majeure event as the flooding in
Australia cut off aluminum supplies from one of its smelting
facilities.
Copper miner Antofagasta PLC fell 2%.
Losses for the miners were partly offset by gains for most banks
as the sector rallied across Europe following successful government
bond auctions in Spain and Italy.
Shares of Royal Bank of Scotland Group PLC (RBS) rose 3.5% and
Lloyds Banking Group PLC (LYG) climbed 1.2%.