Retail sector rally fails to inspire as miners plunge

After bid speculation surrounding Argos owner Home Retail Group on Monday, an Easter-inspired lift to sales during March cheered investors again as the British Retail Consortium said the sector enjoyed its best month in nearly four years.

But metal prices were blunted by a stronger dollar and economic uncertainty, hitting commodity shares and leaving the FTSE 100 index 15.99 points lower at 5761.66 by the close amid low volumes.

The pound was trading at 1.53 against the dollar after approaching 1.55 on Monday, while sterling hovered against the euro at around 1.13. The single currency saw a better day after strong support for a bond issue by debt-laden Greece.

But US markets failed to give much of a fillip to shares, with the Dow Jones Industrial Average sliding below 11,000 in early trading after results from aluminium miner Alcoa disappointed Wall Street analysts.

Alcoa missed its revenue target, even as earnings were in line, supported by rising prices.

"This will certainly be an earnings period where there is continued focus on revenues," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

"Investors are looking for signs of revenue growth to show that the economic rebound is real and is generating real demand."

The cautious mood inspired investors to buy safe-haven US Treasuries. The benchmark 10-year US Treasury note was up 1/32 in price, with the yield at 3.836 per cent.

Mining shares dominated the fallers' board in London, accounting for the five biggest blue-chip casualties. Kazakhmys was the the hardest hit with a fall of 50p to 1527p, or 3 per cent.

However, the retail sector's progress came a day after investors speculated on the possibility of an Asda bid for Home Retail Group. Home Retail was up by another 3/4p to 2947/8p, after climbing 5 per cent on Monday, while B&Q parent Kingfisher also benefited with a gain of 61/4p to close at 2383/4p.

Among other top flight retailers on the front foot, Next lifted 20p to 2323p and Marks & Spencer cheered 41/8p to 3797/8p.

The only negative note from the sector came from FTSE 250 listed Debenhams, which received a lacklustre response to its half-year figures.

The company reported an 18.6 per cent rise in profits to 123.6m but shares fell 21/4p to 761/8p due to its failure to improve like-for-like sales in recent trading.

Elsewhere in the FTSE 250, Punch Taverns was up more than 7 per cent, or 61/8p to 92p, after Panmure Gordon issued a buy rating and said it expected the company to report a stabilisation in its leased pubs at interim results next week. Enterprise Inns benefited from the Panmure note as its shares lifted 15/8p to 1305/8p.

Other major second-tier risers came from the retail sector, with Currys owner DSG International up 11/8p to 355/8p, HMV Group 2.4p stronger at 887/8p, Mothercare 111/2p higher at 5931/2p and catalogue business N Brown up 91/4p to 241p.

There was also a rise of 3 per cent for gambling firm 888 Holdings after its business-to-business division Dragonfish extended a key bingo contract with Foxy Bingo owner Cashcade for another two years until May 2014. Shares were up 3p to 1041/2p.

The four biggest Footsie risers were Man Group up 71/4p to 2721/4p, Kingfisher, Legal & General up 21/4p to 931/2p and Diageo up 20p to 1160p.

The biggest fallers were Kazakhmys, Lonmin off 53p to 2060p, and Fresnillo down 21p to 846p.