Reuters: Hot Stocks: Tesco falls as pull-back on UK's FTSE deepens

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Tesco falls as pull-back on UK's FTSE deepens Jun 3rd 2013, 10:57 Mon Jun 3, 2013 6:57am EDT * FTSE 100 falls 0.4 pct, extending pullback * Tesco falls on concerns over weak results this week * Worries about end to U.S. "QE" weigh on markets * Weak China data also hits sentiment By Sudip Kar-Gupta LONDON, June 3 (Reuters) - A pull-back on Britain's benchmark equity index, which hit near 13-year highs last month, deepened on Monday amid worries about a tapering of U.S. economic stimulus measures and weak Chinese data. The blue-chip FTSE 100 index, which raced to a near 13-year peak of 6,875.62 points in May, was down by 0.4 percent, or 24.15 points, to 6,558.94 points in mid-session trade. Injections of liquidity and interest rate cuts by major central banks have hit returns on bonds and driven many investors over to the better returns available from equities, sparking a global stock market rally this year. However, increasing signs of a recovery in the U.S. economy have resulted in concerns that the U.S. Federal Reserve may scale back a stimulus measure known as quantitative easing (QE), resulting in equity markets losing ground last week. Traders also cited data showing a slowdown in the Chinese economy as a further factor weighing on markets on Monday. "It's a combination of factors - there's the weak data from China and the fact that 'QE' in the U.S is coming into question, which is dampening sentiment," said Hartmann Capital trader Basil Petrides. Supermarket retailer Tesco was among the worst-performers on the FTSE 100, falling 2.3 percent which traders attributed to concerns that the company's first quarter update on Wednesday may reveal a weak business performance. "Dynamics are working against Tesco's UK target margin of 5.2 percent," Investec analysts wrote in a note on Monday, keeping a "sell" rating out on Tesco. MB Capital trading director Marcus Bullus said that if the FTSE 100 broke below the 6,550 point level, it could then fall down to around 6,250 points, which represents the index's low points in February and April. Hartmann Capital's Petrides said he would still look to buy the FTSE when it dipped, on expectations that in the longer run the market would eventually resume its upwards trend, with the FTSE 100 still up 11 percent since the start of 2013. However, Bullus was more cautious and preferred to take out intraday "short" bets on further declines on the index. "We're not looking to go against the trend for the moment," he said. (Reporting by Sudip Kar-Gupta; Editing by Toby Chopra) Link this Share this Digg this Email Reprints

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