MONDAY MARKET CLOSE: Supermarkets end FTSE’s Santa rally

The index had been down more than 30 points but a late revival helped it close 19.6 points lower at 6,731.27.

Alex Conroy, financial sales trader at Spreadex, said: “The fall can be attributed to supermarkets such as Sainsbury’s and Morrisons after growing fear that German competitors such as Aldi and Lidl and their discount prices are cutting into the main UK supermarkets market share.”

Sainsbury’s was 7.3p lower at 371.1p and Morrisons slipped 4p at 263.7p. Tesco was also down, despite news that its plans to expand into India had been given the go-ahead by regulators on the sub-continent. Its shares shed 1 per cent or 3.65p at 336.35p.

Other retailers gave back recent gains amid concerns over the level of discounts being offered in the post-Christmas sales.

Marks & Spencer and Sports Direct were among those heading lower, each down by around 1.6 per cent at 442.7p and 717p respectively.

And Lloyds Banking Group was out of favour amid reports that the government could offload its stake in the bailed out bank before 2014 is out. Although the end of state ownership is ultimately seen as favourable for the stock, the prospect of the taxpayer’s stake flooding onto the market next year pushed Lloyds shares down 0.42p, to 78.42p.

The mining sector provided a counterbalance as it continued to benefit from recent moves by the Chinese central bank to dispel doubts of a brewing credit crisis in the country.

Anglo American topped the blue chip risers’ board with a gain of 2.2 per cent, up 29p at 1,338.5p. Precious metals miner Fresnillo was also higher, up 11p to 746p even as gold and silver prices struggled.