By Simon Kennedy, MarketWatch
LONDON (MarketWatch) -- Retail stocks were the main focus of
trading in London Thursday as shares in Tesco PLC dropped after a
sales update, while Home Retail Group PLC rallied sharply after the
firm's strong performance over Christmas.
Weakness among mining stocks also helped pull the benchmark FTSE
100 index down 0.4% to 6,029.02, with stocks showing little
reaction to news that the Bank of England had, as expected, left
its interest rate and asset-purchase scheme unchanged.
Shares in Tesco dropped 3.6% 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.
The group said total sales in the six weeks to Jan. 8 rose 7.6%
excluding fuel, but comparable U.K. sales were up just 0.6%.
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 in Sainsbury were up 0.4% Thursday.
Several other smaller retailers also provided Christmas trading
updates Thursday.
Shares in electrical-goods chain Dixons Retail PLC slumped 8.7%
after it reported a 2% drop in comparable sales for the group and a
4% fall for its U.K. business.
Home Retail , on the other hand, jumped 9.8% after saying that
pretax profit for the year should still hit the middle of its
previously announced range of 250 million pounds ($394 million) to
£275 million.
Seymour Pierce analyst Freddie George said the company didn't
appear to have been hurt by the bad weather and that a fall in
sales for its Argos division was less severe than expected.
Game Group PLC was another standout performer, surging over 16%.
The computer game retailer said sales trends are continuing to
improve and that 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.
There were several other big movers outside the retail sector.
Shares in Provident Financial PLC jumped 12% after the door-to-door
lender agreed a new £100 million loan facility, which
analysts said removes short-term funding concerns.
Filtrona PLC gained 8.8% after appointing a new CEO 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, and as most commodity prices weakened.
Shares in Rio Tinto PLC (RIO) slipped 0.4%. 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.
Antofagasta PLC was the biggest faller among the large-cap
mining stocks, losing 1.8%.
Losses for the miners were offset by gains for most banks as the
sector rallied across Europe following successful government bond
auctions in Spain and Italy.
Shares in Royal Bank of Scotland Group (RBS) rose 3.6% and
Lloyds Banking Group (LYG) climbed 1%.