By Carla Mozee, MarketWatch
LONDON (MarketWatch)--Tesco PLC shares were among the hardest
hit in London trade on Monday, weighing on the FTSE 100 index,
following a report that a major shareholder cut his stake in the
supermarket chain.
The FTSE 100 was down 0.1% at 6,813.92. The index finished last
week with a 0.7% gain.
Tesco was a drag on the benchmark, with shares down 1.7% after
the chief executive of Harris Associates said the U.S. investment
fund cut its stake in Tesco to about 1%, from 3%. Harris's CEO
David Herro told the Sunday Telegraph that Tesco, the U.K.'s
largest supermarket chain, is facing many unknown risk factors that
"are just too high to justify" carrying a large position. Herro
also said he wants to hear a clear strategy from Tesco's new chief
executive on how he'll improve the business, which is locked in
steeped competition from its rivals.
Tesco's new chief executive, Dave Lewis, was expected to begin
work on Monday, a month earlier than had been planned. On Friday,
Tesco shares dropped 6.6% after Tesco cut its full-year trading
outlook below analysts' expectations of 2.7 billion pounds ($4.49
billion) to GBP2.8 billion. It was the company's third profit
warning in three years. Tesco also cut its interim dividend.
In the retail space Monday, shares of Wm Morrison Supermarkets
sank 3.1%, J. Sainsbury PLC declined 1.3% but Marks & Spencer
Group pushed 1.7% higher.
Elsewhere, shares of Barclays were down 0.3%. They had been up
earlier Monday after Spain's Caixabank SA on Sunday said it's
agreed to buy Barclays retail-banking business in Spain for about
800 million euros ($1.05 billion). The final price will be
dependent upon the division's total assets at the end of the year.
Barclays said Sunday its Spanish units had EUR22.2 billion in
assets and EUR20.5 billion in liabilities as of June 30. The move
scales back the British bank's presence in a less-profitable
market.
The U.K. equity market was down alongside European markets,
which turned lower after Russia's foreign minister said Moscow will
defend the country's economy if it comes up against a fresh round
of Ukraine-related sanctions.
Data: "Russia's escalation of the conflict in Ukraine has taken
a toll on the internationally exposed manufacturing sector, and
that effect could yet worsen further in the coming months, given
recent confidence drops in the more directly exposed core European
economies," said Robert Wood, chief U.K. economist at Berenberg, in
note about a slowdown in the U.K. manufacturing sector. Data from
Markit/CIPS released Monday showed the sector expanded at the
slowest pace in 14 months in August.
Separately, the Bank of England said Monday mortgage approvals
in the U.K. fell in July to 66,569, which was less than the
consensus estimate of a fall of 66,000. Net lending in July rose to
GBP3.4 billion in July, the highest level of consumer lending since
mid-2008.
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