Britain’s FTSE holds near 3-week highs, though Tesco tanks

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London | April 12, 2017 5:39 PM

While Tesco's full-year profit beat forecasts with a 30 percent rise, showing that its recovery is gaining pace, analysts flagged a few negatives such as a decline in international margin and a slowdown in UK and Ireland margins.

Britain’s top share index rose on Tuesday, holding close to a three-week peak though results weighed on Tesco’s shares and the broader UK supermarket sector. (Reuters)

Britain’s top share index rose on Tuesday, holding close to a three-week peak though results weighed on Tesco’s shares and the broader UK supermarket sector. The blue-chip FTSE 100 index was up 0.4 percent at 7,392.27 points by 0940 GMT in light volumes ahead of a market holiday later in the week.

Financial and industrial stocks added the most points to the index, with engineer Rolls-Royce the biggest gainer, up 3.1 percent. Gains were broad-based, with both Old Mutual and Mediclinic rising around 1.7 percent and GKN up 1.5 percent. British grocers were the biggest fallers, however, led lower by a 4.6 percent drop in Tesco’s shares after the supermarket reported full-year figures.

While Tesco’s full-year profit beat forecasts with a 30 percent rise, showing that its recovery is gaining pace, analysts flagged a few negatives such as a decline in international margin and a slowdown in UK and Ireland margins. Likewise, Tesco’s shares had rallied around 6 percent over the past 5 sessions going into the results.

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“I am particularly surprised that Tesco finds itself so far down at the bottom (of the FTSE 100) because it seems, on all accounts, to be quite a positive results release on the whole,” Henry Croft, research analyst at Accendo Markets, said. “It just seems that these exceptional costs have really got in the way of investor sentiment because returning to sales growth for the first time in seven years is no mean feat,” Accendo Markets’ Croft added.

Peers Morrison’s and Sainsbury also fell, both down around 1.3 percent, while mid cap Booker Group , which has agreed to a 3.7 billion pound ($4.6 billion) takeover by Tesco, also dropped 3.4 percent. Shares in recruiter Pagegroup were the top gainers among British mid caps, rising 6.5 percent after it posted a record quarterly gross profit that beat expectations, helped by growth in its markets outside the UK.

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