THURSDAY MARKET CLOSE: Supermarket sell-off drags FTSE back

Morrisons sparked a shares sell-off across the supermarket sector amid fears over the impact of discount chains on the “big four” players after it slumped into the red.

The firm’s chief executive Dalton Philips said the grocery sector was undergoing the biggest structural shift since the advent of supermarkets in the 1950s.

David Madden, market analyst at IG, said: “Morrisons acknowledged it needs to adapt to the new environment or get left behind; the struggling supermarket was hit by a massive write-down, and a lower guidance on future dividends hasn’t helped investor confidence.”

Shares in the Bradford-based group slumped almost 12 per cent, down 27.8p to 205.2p, in another painful session for the FTSE 100 Index, which fell 67.12 points or 1 per cent to 6,553.78.

It marked the fifth consecutive session in the red as China’s uncertain economic prospects continued to worry investors, particularly after the release of more disappointing data.

Tesco dropped 15.7p to 298.8p and Sainsbury’s lost 28.3p to 304.9p.

There was better news elsewhere in the retail sector after Argos and Homebase owner Home Retail Group upgraded its profit guidance for the second time this year.

The update lifted shares in the FTSE 250 Index stock by 5 per cent or 10.3p to 215.4p, propelling it to its highest level since June 2011. B&Q and Screwfix owner Kingfisher benefited from the update in the FTSE 100 Index as its shares rose 4.5p to 407.4p.

Centrica was the biggest riser in the top flight after broker HSBC upgraded the firm and highlighted its strong upstream prospects as it increases its focus on more productive areas such as Norway and the United States.

The shares improved by 2 per cent or 6.9p to 334.8p.