Tesco tumbles again as Britain’s FTSE edges lower

September 1, 2014
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* FTSE 100 edges lower

* Tesco (Xetra: 852647news) falls again as top shareholder cuts stake

* New York stock market closed for public holiday

By Sudip Kar-Gupta

LONDON, Sept 1 (Reuters) – Britain’s top equity index edgedlower on Monday, as another sharp fall in the share price ofsupermarket retailer Tesco pegged back the overallstock market.

The blue-chip FTSE 100 index fell by 0.1 percent, or7.06 points, to 6,812.69 points in early trading. Volumes wereexpected to be relatively thin, with New York closed for apublic holiday.

Tesco retreated by 2 percent, following a 6.6 percent slumpon Friday after the company cut its profit forecast for thesecond time in two months and slashed its interim dividend.

Tesco took another hit on Monday after Harris Associates,one of its largest shareholders, sold around two-thirds of itsstake in the company. Its share price fall also weighed onrivals such as J Sainsbury and WM Morrison,whose stock prices also weakened.

“There is negative pressure building up on Tesco’s shares.The dividend is going to become an issue and there is pressureon the management to review its strategy, because it’s clearlynot working,” said Beaufort Securities sales trader BasilPetrides.

The FTSE 100 hit a peak of 6,894.88 points in mid-May, whichmarked its highest level in more than 14 years. But it has notyet passed the 6,900 point mark, considered a key hurdle beforethe FTSE can challenge record highs around 7,000 points.

Although the FTSE and other European stock markets have beenpropped up in recent months by expectations of new economicstimulus measures from the European Central Bank (ECB), sometraders were wary about betting on big near-term gains.

“I would look to sell into rallies at the moment,” saidBerkeley Futures’ associate director Richard Griffiths. (Reporting by Sudip Kar-Gupta; Editing by Andrew Heavens)

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