Tesco led the London market higher as its shares leapt 15 per cent on the back of better-than-expected Christmas sales figures.
The wider FTSE 100 Index rose sharply for the second session in a row – up 150.13 points to 6,569.96 – as confidence was also boosted by positive economic news from the United States and signs of stabilisation in oil prices.
On the Continent, French and German markets were up even more steeply, with the CAC 40 and the Dax each adding more than 3 per cent.
Grocers took the first three places on the top flight leaderboard after Tesco chief executive Dave Lewis also impressed the City with his plan to close unprofitable stores.
Alastair McCaig, market analyst, IG, said: “Tesco’s share price jump is maybe as much a reflection of how aggressively its shares have been treated over the last six months as it is of the optimism that the figures have generated.”
Tesco shares were 27.25p higher at 209.25p, even though the company announced it would axe its dividend for the current financial year. Sainsbury’s was up almost 10 per cent, adding 22.8p at 252.4p, and Morrisons climbed 13.3p at 184.7p.
Tesco’s appointment of Matt Davies as the new boss of its UK business dealt a blow to shares in Halfords, which he currently heads – shares in the FTSE 250 stock were almost 9 per cent lower at 423.3p.
The other major retail story concerned Marks & Spencer after more disappointing sales figures from its general merchandise division.
Chief executive Marc Bolland blamed unseasonal weather conditions and teething problems at the company’s new distribution centre but investors were unforgiving as shares in the chain fell almost 4 per cent or 16.3p to 446.9p.
Outside the top flight, fashion retailer Ted Baker reported better-than-expected trading for the festive period, and its shares lifted 124p to 2,384p.