Market round-up: FTSE gains as Tesco, Debenhams and Morrisons surge ahead

UK stocks gained ground on 12 January, reversing the previous session's losses on the back of strong Christmas figures from a number of retailers as London's blue-chip FTSE 100 index closed up 0.98% to 5,929.24.

European equity markets were also firmly in positive territory, despite yet another dismal session in Asia, which saw all the main benchmarks, bar the Shanghai Composite Index, close in the red as the slowdown in the region shows no sign of improving.

"Bulls have come out of hiding today, helping to recover some lost ground in equity markets," said IG's senior market analyst Craig Beauchamp. "China's power to shock has diminished for now, but nervousness still persists. In any event, with major US banks still to publish numbers, the potential for bullish momentum still looks limited."

Retailers were the star performers on both of London's main benchmarks, with Tesco among the top risers on the FTSE 100 ahead of its trading update, which is scheduled to be published on 14 January, despite data released by Kantar Worldpanel showing sales at the retailer declined 2.7% in the Christmas period.

However, investors were buoyed by a better-than-expected trading update from Morrisons, which recorded a 0.2% gain in like-for-like sales in the nine weeks to 3 January compared with the 2% decline analysts had expected.

Figures published by Kantar showed a 2.6% decline in sales over a 12-week period to 3 January, largely due to a number of store closures, while the FTSE 250 group forecast full-year underlying profit before tax would be between £295m to £310m before the £60m restructuring and store closure costs.

Fellow FTSE 250 retailer Debenhams was also on the front foot, after posting better-than-expected results over the Christmas period, due to a sharp increase in online sales.

In the 19 weeks to 9 January, like-for-like sales at the high street retailer rose 1.9% year-on-year, comfortably beating analysts' expectations for a 0.3% gain, while sales in the nine weeks to 9 January grew 1.8% from the corresponding period in 2014.

There was, however, less positive news from Greggs, which posted a 5.2% year-on-year increase in sales over a 52-week period but was hit by a downgrade from analysts at Shore Capital, who lowered its rating on the stock from "buy" to "hold".

"We believe we have come to the end of the recent upgrade cycle and following a +50% share price appreciation over the past 12 months expect a more sedate stock price performance in 2016," the broker said in a note.

Recruitment group Michael Page slumped after reporting currency fluctuations had hit fourth quarter results, resulting in a £26m loss. Fourth quarter profits fell 0.5% year-on-year on a reported basis but were up 5.3% on constant currency terms.

Despite a slight recovery in the price of oil, commodity-related stocks were again on the back foot on both the FTSE 100 and the FTSE 250, with Randgold Resources, Antofagasta, BHP Billiton, Rio Tinto and Tullow Oil all firmly in the red.

FTSE 100 - Risers

Tesco 155.20 +9.75 +6.70%
Shire Plc 4,114.00 +189.00 +4.82%
Berkeley Group Holdings 3,672.00 +134.00 +3.79%
GKN 288.30 +9.60 +3.44%
Sainsbury's 251.20 +7.90 +3.25%

FTSE 100 - Fallers

Randgold Resources 4,188.00 -163.00 -3.75%
Antofagasta 374.10 -13.60 -3.51%
BHP Billiton 617.90 -18.20 -2.86%
Rio Tinto 1,652.00 -45.00 -2.65%
Aberdeen Asset Management 244.30 -5.60 -2.24%

FTSE 250 - Risers

Debenhams 76.50 +10.50 +15.91%
Vedanta Resources 234.00 +26.40 +12.72%
Jimmy Choo 135.00 +12.30 +10.02%
Morrison (Wm) Supermarkets 165.50 +13.20 +8.67%
Jupiter Fund Management 438.00 +18.50 +4.41%

FTSE 250 - Fallers

Greggs 1,049.00 -176.00 -14.37%
Michael Page International 410.50 -36.10 -8.08%
Tullow Oil 123.10 -9.60 -7.23%
Hays 121.20 -8.70 -6.70%
Talktalk Telecom Group Plc 189.50 -12.10 -6.00%