London close: Tesco turmoil and Chinese woe drag down shares
Turmoil at Tesco and worries about the Chinese economy sent London's top shares into a downward spiral on Monday.
Tesco shares ended the session 26.6p or 11.6% down at 203p after the troubled supermarket chain revised its first-half profit forecast, saying it had over-estimated it by £250m.
The group said it would launch an independent review and suspended four members of staff. The BBC and Sky News reported that Chris Bush, the managing director of Tesco's UK business, was one of the four.
Broker Killik & Co said: "This comes as a further disappointment and the shares have been marked down in trading this morning. Given the ongoing uncertainty this issue creates, we are moving our recommendation to 'neutral' while we await further information."
Another broker, Hargreaves Lansdown, said: "The market consensus of the shares as a 'sell' will no doubt be consolidated following this announcement."
Other food retailers were down following the news, with Sainsbury's losing 5.5p to 278.8p and Morrisons dropping 3p to 179p.
The FTSE 100 Index closed 64.29 points adrift at 6773.63 amid concerns about a softening Chinese economy and a cash crunch, with Chinese finance minister Lou Jiwei playing down the possibility of more stimulus from the government.
Glencore lost 17.55p at 341.9p after iron ore miner London Mining announced it was considering terminating its offtake contract with the mining and commodity giant over a dispute about a payment. London Mining's shares fell 2.75p or 10.6% to 23.25p.
Other miners took a hit from the Chinese economic news, with Rio Tinto backtracking 120.5p to 3058.5p, BHP Billiton falling 63p to 1730.5p and Anglo American easing 45.5p to 1426.5p.
TUI Travel flew 7.2p higher to 391p after Morgan Stanley included the tour operator in its Best Ideas list.
Elsewhere, Toby Carvery and Harvester owner Mitchells & Butlers was 14.2p lower at 417.5p after JP Morgan Cazenove reduced its sales forecasts by 3%. The broker also cut its forecasts for rival pub and brewing groups Marston's by 3% and Greene King by 2%. Marston's shares fell 2.4p to 150.1op and Greene King was 6.5p down at 793.5p.
Market Movers
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FTSE 100 6,773.63 -0.94%
FTSE 250 15,744.61 -0.72%
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Admiral Group (ADM) 1,250.00p +1.30%
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FTSE 100 - Fallers
Tesco (TSCO) 203.00p -11.59%
Glencore (GLEN) 341.90p -4.88%
Rio Tinto (RIO) 3,058.50p -3.79%
BHP Billiton (BLT) 1,730.50p -3.51%
Aberdeen Asset Management (ADN) 417.10p -3.16%
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Fidessa Group (FDSA) 2,228.00p -5.19%
Synthomer (SYNT) 226.00p -4.92%
Poundland Group (PLND) 323.00p -4.32%
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Petra Diamonds Ltd.(DI) (PDL) 190.20p -3.30%
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NCC Group (NCC) 200.75p -1.23%
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Phoenix IT Group (PNX) 111.00p -0.67%
Sepura (SEPU) 140.50p -0.53%