Global fears outweigh gains

GLOBAL economic concerns hit stocks yesterday and offset strong gains from blue chip retailers on London's leading share index.

A profits upgrade from Home Retail Group – which owns Argos and Homebase – helped retailers make strong advances.

But the wider FTSE 100 Index slipped into the red, closing down 23.3 points at 5,617.3.

Richard Hunter, head of UK equities at Hargreaves Lansdown, said: "We seem to have run out of breath at this stage.

"We're now inching towards the Easter break and we're probably six to eight weeks away from the next quarterly reporting season. In the absence of any major news, we could well see the market drifting for a while yet."

A sharp rise in Chinese inflation raised fears that officials could slam on the economic breaks and dent a global recovery. The potential impact on growth prospects put a raft of mining stocks under pressure, led by Kazakhmys, which fell 3 per cent or 49p to 1,496p.

Wall Street's Dow Jones Industrial Average also dipped in early trading after mixed jobs data, weighing further on the London market. The pound at least had a better day and crept above 1.5 against the dollar.

James Hughes, an analyst at CMC Markets, said: "It has been yet another session in which we have lacked any real key data to get our teeth in to especially in the early part of the day.

"Better than expected numbers out of the US have done nothing to help the US markets. The Dow is still lower despite the trade balance figures posting a smaller than expected increase."

The main cheer in an otherwise lacklustre session came from the retail sector. Home Retail made its second increase to guidance in less than three months, causing its shares to rise by 4.2p to 272p.

Analysts said cost cuts and better than expected margins at the Argos business lay behind the upgrade to 290 million for the year to the end of February.

And while Home Retail's sales were under pressure due to the weather, other retailers drew encouragement from the figures as Marks & Spencer lifted 4.6p to 353.7p, Next added 42p to 2,020p and Kingfisher – which owns B&Q – rose 7p to 223.7p.

They were joined on the risers board by Thomas Cook after the travel giant's investor day prompted analysts at Panmure Gordon to maintain their positive stance on the stock. Shares were 7.7p higher at 248.1p.

Among companies reporting results, supermarket chain Morrisons failed to benefit after a strong set of full-year figures showed a 21 per cent rise in profits to 767m. Shares slipped 3 per cent or 8.5p to 295.7p as analysts noted the company's more cautious outlook comments.

Meanwhile, JD Wetherspoon shares were up 1 per cent or 7p to 512p after it reinstated its dividend in the wake of a 17.5 per cent rise in underlying half-year profits to 36.2m.

Also in the second tier, shares in support services firm Connaught rose 6p to 308.5p, as traders digested reports of potential bid interest from 3i. Connaught later denied the rumour.

Waste disposal group Shanks moved in the opposite direction, down 4.4p to 104p after private equity firm Carlyle confirmed it was no longer interested in bidding for the firm.

Edinburgh-based insurance and pensions giant Standard Life continued Wednesday's gains following its annual results, adding a further 4.6p yesterday to close at 214.8p.

The rise came as chairman Gerry Grimstone bought 25,000 shares in the company, while both Keith Skeoch, chief executive of Standard Life Investments, and Caroline Nish, wife of new group chief executive David Nish, bought 75,000 shares each.