FTSE falls as supermarkets weigh on indexes

The City’s top share index gave back some of its Tuesday gains as it was hit by poor performances from supermarkets and the mining sector.

A disappointing update from Sainsbury’s sent the retailer to the bottom of the FTSE 100, closing down more than 6% after saying it plans to scale back its clothes sales from some shops.

The company also plans to shut more standalone Argos sites, it revealed, as part of a plan to save £1 billion a year.

The company’s drop also weighed on Tesco, which saw its shares close 3.41% lower on Wednesday.

Between them, the two supermarkets - and mining companies like Antofagasta, Anglo American and Endeavor Mining - all weighed on the FTSE 100 which fell 52.26 points, or 0.68%, to end the day at 7,628.75. It wiped out much of Tuesday’s 68-point gain.

“The seesaw battle going on in the FTSE 100 swung the way of the bears today,’’ said Chris Beauchamp, chief market analyst at online trading platform IG.

“Barratt Developments slumped on news of its acquisition of rival Redrow, and a poorly-received update from Sainsbury’s hit supermarket shares.

“Despite the index’s relative cheapness, it remains firmly unloved, and languishes well off its record highs even as its peers in Europe and the US continue to look well-placed for more gains.’’

Elsewhere in Europe, the top indexes were also struggling. Frankfurt’s Dax index fell 0.65%, while the Cac 40 in Paris closed 0.36% lower.

In New York a little while after markets had closed in Europe, the S&P 500 had gained 0.75%, while the Dow Jones was 0.42% higher.

On currency markets, the pound had gained 0.24% against the dollar at 1.2628 and had risen 0.11% against the euro at 1.1728.

In company news, Barratt Developments announced a £2.52 billion deal which would see it take over Redrow, a smaller housebuilding rival.

The deal, which could lead to close to 1,000 job cuts across the businesses, could accelerate construction of homes, the companies said.

Shares in Barratt plummeted 5.47%, while those in Redrow increased 13.60%.

The biggest risers on the FTSE 100 were Smurfit Kappa, up 102p to 2,972p, DS Smith, up 8.1p to 281.1p, Rollsroyce, up 5.1p to 322.9p, Centrica, up 2p to 135.2p, and Sage Group, up 16p to 1,169.5p.

The biggest fallers on the FTSE 100 were Sainsbury’s, down 16.7p to 258.9p, Barratt Developments, down 29p to 501p, Vodafone, down 2.63p to 63.6p, Antofagasta, down 67p to 1,697.5p, and Anglo American, down 68p to 1,754.6p.