Tesco’s troubles weigh on the FTSE

Royal Bank of Scotland topped the FTSE 100 leaders’ board yesterday after it announced plans to restructure its investment banking operation and cut some 3,500 jobs.

Investors appeared to back RBS’ plans, which will include closing or selling a range of businesses across its investment and wholesale banking divisions, as shares climbed 6 per cent or 1.2p to 23p.

The move helped other banking stocks make gains, with Lloyds up 1p at 29.1p and Barclays ahead by 3.2p at 193.5p.

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But the sector failed to keep Britain’s top share index in the black after Tesco issued a grim Christmas update and shock profits warning.

Shares in the UK’s biggest supermarket crashed by 16 per cent after it admitted that profits growth would be at the low end of expectations this year following a 2.3 per cent drop in like-for-like sales in the six weeks to 7 January.

The stock fell 61.6p to 323.5p - a near-three year low.

With nearly £5 billion wiped off Tesco’s market value and several other retailers also in the red, the FTSE 100 Index lost earlier gains to fall 8.4 points to 5,662.42.

Even though Sainsbury’s and Morrisons have already posted resilient updates, shares in the pair were down by 16.2p at 285.9p and 18.1p at 285.9p respectively.

But online grocer Ocado bucked the negative retail trend and shot to the top of the FTSE 250 Index with a 33 per cent increase in its share price after it reported a bumper Christmas.

The company said sales rose 16 per cent to £59 million in the four weeks to Christmas Day after it postponed warehouse improvements over the key trading period. Its shares rose 18.6p to 74p.

NEW YORK: On Wall Street, the S&P 500 closed at a five-month high for the third day last night, but had difficulty extending gains in the face of lacklustre economic data and another European bond market test.

The Dow Jones industrial average was up 21.57 points, or 0.17 per cent, to end the day at 12,471.02 while the broader Standard & Poor’s 500 Index was up 3.02 points, or 0.23 per cent, at 1,295.50. The Nasdaq Composite Index rose 13.94 points, or 0.51 per cent, to close at 2,724.70.