LONDON (Reuters) - Britain’s top equity index ended lower on Friday, dragged down by mining stocks, though supermarket group Tesco rose after reporting a smaller than expected decline in sales.
Tesco advanced 2.7 percent after posting first-quarter performance suggesting it is recovering from an 18-month slump. That made it the best-performing stock in percentage terms on the blue-chip FTSE 100..
“Every little helps as Tesco seems to have stemmed some of its recent declines in this quarter. The like-for-like sales numbers generally still remain in negative territory, but there are nonetheless signs of progress,” Richard Hunter, head of equities at Hargreaves Lansdown, said.
“Tesco is restructuring the entirety of the business, including a renewed focus on the core UK market as well as the consolidation of the Central European structure. Meanwhile, the Asian operations are also showing signs of life.”
The FTSE 100 index still closed with a 0.8 percent decline at 6,753.70 points, with the persistent threat of a Greek debt default holding back global equity markets.
Without a deal at the weekend to unlock frozen aid, Greece, which has received two bailouts worth 240 billion euros ($268.85 billion) since 2010, is set to default on a June 30 repayment to the International Monetary Fund.
“The market is coming under pressure, but there is still a chance they will reach a last-minute agreement on Greece, as they have done in the past,” said Dafydd Davies, partner at Charles Hanover Investments.
European Commission President Jean-Claude Juncker said on Friday that he was “quite optimistic but not over-optimistic” of a cash-for-reform deal with Greece at a crucial meeting of euro zone finance ministers on Saturday.
Mining stocks took the most points off the FTSE, with the FTSE 350 Mining Index down 2.1 percent. Mining companies account for about a tenth of the FTSE 100.
Traders said mining stocks fell because research firm Morningstar forecast steel demand in China -- the world’s biggest metals consumer -- had peaked. A slump in the Chinese stock market on Friday aggravated the pressure.
UK-listed units of Asia-focused funds fell sharply, with Fidelity’s China Special Situations fund, J.P. Morgan’s China fund and Blackrock’s Frontiers Investment Trust slipping by between 3.3 percent and 5.3 percent.
Chip designer ARM slipped 5 percent after rallying on Thursday as Bernstein downgraded it to “underperform”, saying it saw genuine risk of the smartphone slowdown observed in the first quarter being the first of a series.
The FTSE 100 reached a record high of 7,122.74 points in April but has since retreated 5 percent below that record high. The index remains up around 3 percent since the start of 2015, less than a 14 percent gain on the broader, pan-European FTSEurofirst 300 index.
Additional reporting by Sudip Kar-Gupta; Editing by Larry King and David Goodman
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