* FTSE 100 edges up by 0.2 pct
* Banks add most points to index
* Sainsbury and Morrison shares fall
* Barclays strategists forecast weak sales for retailers
By Sudip Kar-Gupta
LONDON, Jan 7 Britain's top equity index
steadied on Tuesday as stronger bank stocks offset weaker retail
stocks, and many traders kept a longer-term positive outlook,
helped by signs of a gradual UK economic recovery.
The blue-chip FTSE 100 index, which rose 14.4
percent in 2013 to post its best annual gain since 2009, edged
up by 0.2 percent, or 14.15 points, to 6,744.88 points in early
A rise in banking groups HSBC and Lloyds
together added the most points to the FTSE 100, with traders and
fund managers betting on the sector recovering as the broader
British economy strengthens.
"They've had a good run but I think there's more to come,
particularly as the economy picks up a little bit more," said
Cavendish Asset Management fund manager Paul Mumford.
New signs the British economy is slowly recovering from the
effects of the 2008 global financial crisis came on Tuesday with
data showing that UK new car sales had hit a 5-year high.
The British Chambers of Commerce (BCC) also said in a survey
that UK businesses had reported strong growth and rising
confidence in the fourth quarter of 2013.
SUPERMARKET RETAILERS FALL
One part of the stock market that underperformed on Tuesday
was the food retailer sector, with stocks such as J Sainsbury
and Wm Morrison falling.
Marks & Spencer recovered from a 0.8 percent fall in
the previous session to rise 1.8 percent, ahead of its trading
update later in the week although many analysts are forecasting
Supermarket retailers have been hit by losing market share
to German rivals Lidl and Aldi, while clothing companies have
had to contend with fierce competition on the High Street, with
Debenhams issuing a profit warning in December.
Barclays equity strategists forecast lower sales for
Sainsbury, Morrison and Tesco, and warned M&S could miss its
gross margin target.
Sucden Financial's Andrew Crook said in spite of weakness in
the FTSE caused by dips in sectors such as the retailers,
investors should look to use such pullbacks to add to equity
positions due to the favourable long-term outlook.
"I would err towards buying on the dip," he said.