FTSE close: Experian up; Home Retail hit

 

London's posted strong gains today despite a tough session for the retail sector after the owner of catalogue chain Argos issued a gloomy warning over high street trading.

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An improved session for for the US market sparked the rally, with the benchmark Dow Jones Industrial Average climbing as investors tried to reverse a run of six straight days of falls caused by concerns over the health of the US economy.

The wider FTSE 100 Index rose by 47.5 points at 5,856.3 as resources companies led the market higher, with oil companies buoyed by yesterday's stalemate at producer's cartel OPEC over an increase in official production levels.

The US currency benefited from a sell-off in the euro as European Central Bank President Jean-Claude Trichet signalled a rise in interest rates is on the cards for July, but also hinted that it might be the last increase for a while.

The pound also rose against the the euro, to 1.128, even though the Bank of England left interest rates on hold. Sterling dipped slightly to 1.637 against the US dollar.

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 25.8p to 176.5p.

Elsewhere in the retail sector, Marks & Spencer dropped 3.4p to 366.7p and B&Q parent Kingfisher fell 0.1p to 274p.

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 51.5p lower at 932p, a fall of 5%.

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 408.5p.

Lloyds Banking Group hit the top of the fallers' board with a drop of almost 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 0.9p at 47.8p.

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 0.3p at 41p while Barclays fell 3.2p to 260p.

Miners offered offered some support after a turbulent week as Antofagasta reversed yesterday's losses to stand 30p higher at 1256p.

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 5.9p at 450p, Cairn Energy was 2.9p ahead at 424p and Petrofac advanced 17p to 1544p.

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 by nearly 5% or 94p at 2050p.

The biggest FTSE 100 risers were Weir Group up 94p to 2,050p, Resolution ahead 12p at 316p, Wolseley up 64p at 1,971p and Experian ahead 23.5p at 802.5p.

The biggest fallers were TUI Travel down 4.5p at 218.2p, Lloyds Banking off 0.9p at 47.8p, Smiths Group down 16p at 1,161p and Imperial Tobacco off 29p at 2,110p.

16.05: A rally in energy stocks has prompted a rebound on US markets.

The Dow Jones is up 91.2 points at 12,140.1.

The FTSE 100 is 46.7 points higher at 5,855.6.

15.00:

The Dow Jones has opened 38.5 points higher at 12,087.5 following mixed economic data.

Weekly jobless claims rose by more than forecast but there was an unexpected narrowing of the US trade deficit in April.

Back in London, the FTSE 100 is up 10.9 points at 5,819.8.

12.40:

The FTSE 100 has remained flat after the Bank of England resisted calls to rein in inflation and kept the UK base rate at 0.5% for a 27th month.

The index is down 1.05 points at 5,807.8.

There's more on the rate decision here.

We also have more on the latest trading update from JD Sports, which reveals a worsening sales decline in the past few months. However, the retailer believes the figures are skewed by last year's World Cup.

Its stock is down 7% or 73p at 906.5p.

Lloyds Banking Group is at the top of the FTSE 100 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.

Meanwhile, rising oil prices - Brent crude stood 0.2% higher at $117 a barrel - lifted the oil and gas sector.

BP was up 1.3p at 445.45p, Cairn Energy was 0.7p ahead at 421.9p 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 2% or 41p at 1997p.

Gold was fixed this morning at $1,534 an ounce compared with $1,537.75 at the previous close.

Futures trading indicates that the Dow Jones might break its six-day run of losses later. US investors are waiting for jobs and trade data.

11.30:

We have more on the gloomy update from Argos owner Home Retail, including analyst reaction and views on the state of the High Street.

Home plummeted 12%, or 24p, to 178.3p in trading today.

The FTSE 100 is up just 1.8 points at 5,810.7 as investors sit on their hands ahead of interest rate news from the Bank of England and Euopean Central Bank.

'With traders now eyeing the rate decisions out of both London and Frankfurt, minds are once again focused on the simple fact that the era of cheap money is fading fast,' said Anthony Grech, head of research at spreadbetter IG Index.

'Even though no changes are expected today, there's likely to be an indication from [Jean-Claude] Trichet that another quarter-point will be added by the ECB soon.'

9.55:

The FTSE 100 is trading in lacklustre fashion ahead of the Bank of England's interest rate announcement later, although a dismal bulletin from Home Retail has hit shopowners.

The blue chip index is up 4.5 points at 5,813.4 as investors await news from the monetary policy committee, which is widely expected to maintain the cost of borrowing at 0.5% for another month.

Catalogue chain Argos triggered alarm in the retail sector after its owner warned conditions were 'more difficult and volatile' than expected.

FTSE 250 company Home Retail Group, which also owns Homebase, saw its shares fall 12% or 24.2p to 178.1p after it revealed a 9.6% decline in like-for-like sales at Argos over the 13 weeks to May 28.

In the top flight index, Marks & Spencer fell 4.6p to 366.6p while B&Q owner Kingfisher dropped 3p to 270.9p. In the second tier, Dixons Retail fell 1.3p to 17.9p.

JD Sports Fashion added to uncertainty surrounding the retail sector 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.

Its shares, which have enjoyed a strong run in recent months, were 34p lower at 945.5p, a fall of 3%.

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 leisure goods. Shares jumped 8%, or 39.9p, to 437.7p.

Miners offered some resistance after a turbulent week, with Antofagasta reversing yesterday's losses to stand 20.5p higher at 1246.5p.