FTSE snaps six-session winning run, retailers weak

Reuters
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A trader poses in front of a screen on a trading floor in London January 22, 2010. REUTERS/Stefan We …

By Tricia Wright

LONDON (Reuters) - The top shares lost ground on Monday as investors squared positions into the year end after six straight sessions of gains, pressured by retailers on concerns over how they have fared over the crucial festive season.

The FTSE 100 closed down 19.60 points, or 0.3 percent, at 6,731.27 points, pausing after its longest winning streak since October, which saw it rise around 4 percent since December 18.

Volumes were, however, very thin - exaggerating the impact of any orders in the market - at around half of the 90-day daily average, with many investors still out for the Christmas break.

Britain's biggest clothing retailer Marks & Spencer and sporting goods store Sports Direct were among the biggest FTSE 100 casualties, off 1.7 percent and 1.6 percent respectively, ahead of trading updates from the broader sector in the coming days.

Bicycles-to-car-parts group Halfords, down 3.6 percent, was the top faller on the FTSE 250 index.

"There's too much uncertainty in those (retailers') shares; people are not sure whether they've had a good Christmas," Ed Woolfitt, head of trading at Galvan, said.

"Galvan's view on retailers (right now) is clear - keep away."

Traders also cited Kantar data released earlier this month showing the country's "big four" supermarkets were losing market share to discount grocers as a catalyst for share price falls in the sector.

The big three listed stores, Sainsbury, Tesco, and Morrison were left nursing respective losses of 1.9 percent, 1.1 percent, and 1.5 percent. Some analysts said, however, retailers should be underpinned by a healthier domestic economy in 2014.

"The market has priced in some light numbers but notwithstanding any other material surprises we continue to see value in the medium term in the retail sector," Atif Latif, director of trading at Guardian Stockbrokers, said.

"An improving economy will allow for greater margins (and) EPS (earnings per share) upgrades."

Despite the weakness in the broader market on Monday, analysts remained bullish on the UK benchmark which has notched gains of around 14 percent in 2013, a year which has seen the index scale 13-year highs, some 2 percent above current levels.

"I think we're looking to push the highs we've seen over this year (in the first quarter of 2014)," Barclays Capital analyst Lynnden Branigan, said.

(Additional reporting by Sudip Kar-Gupta; Editing by Toby Chopra)

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