* FTSE 100 down 0.2 pct
* WM Morrison and Tesco both report a drop in sales
* William Hill hit by threat of government regulation
By Alistair Smout
LONDON, Jan 9 Britain's top share index fell on
Thursday, hit by a string of weak trading updates from retailers
that confirmed a tough Christmas on the high street and
regulatory concerns for bookmaker William Hill.
WM Morrison, Britain's fourth-largest supermarket,
fell 6.2 percent in early trade, the top FTSE 100
faller, after the grocer posted a sharp fall in like-for-like
sales over Christmas.
The company blamed the "disappointing" performance on
difficult market conditions, heavy discounting by rivals and the
lack of a full online offer. It said it now expected its
full-year underlying profit to be towards the bottom of the
range of current market expectations.
"There's the impression that more and more business is going
online, and Morrison's has been slow to come into that area.
Their online offering is going to need to become pretty good,
pretty quickly to compete," Will Hedden, sales trader at IG,
Tesco, the world's third biggest retailer, fell 3.6
percent after it also reported a drop in like-for-like sales,
saying profit would be lower than it guided for in December. J
Sainsbury fell 1.7 percent, the day after it cautioned
over consumer demand.
Marks & Spencer recovered an early fall to trade 1
percent higher, however, as a good performance in its food
division and reassurance from the conference call outweighed a
tenth straight quarter of decline in clothing sales, traders
The FTSE 100 dipped by 12.38 points, or 0.2 percent, to
6,709.40, with consumer staples taking five points off the
index. The energy sector provided support for the index as the
oil price firmed, led up by Tullow Oil, the index's top
riser, which gained 2.5 percent after an upgrade by HSBC.
Rivalling the retailers among top fallers was William Hill
, down 6 percent, suffering from a downgrade to equal
weight from overweight by Barclays after the British parliament
debated fixed odds betting terminals and did not rule out
"Regulatory change has always been the key driver of
sentiment toward the gambling sector. Yesterday the Labour Party
called for greater regulation of the gambling industry in the
UK," analysts at Barclays said in a note.
"We stress that there has been no change to regulation but
we expect that this negative news-flow will weigh on the
sector...In the absence of clarity, we downgrade William Hill."
Mid-cap Ladbrokes fell 4 percent, with Barclays
cutting its rating on the stock to "underweight".
"For the bookmakers, any mention of regulation is going to
be a big concern for investors, and as the market is weaker
today, the move is getting exaggerated," IG's Hedden said.