Sainsbury's helps FTSE bounce back
SUPERMARKETS led London's top-flight out of its two-day decline today after Sainsbury's reported a better-than-feared drop in sales.
Britain's third biggest grocer suffered a sixth quarter in a row of falling like-for-like sales, but the 2.1 per cent drop beat analysts' more pessimistic forecasts, helping the shares surge 5 per cent.
Rivals Tesco and Morrisons also climbed strongly on hopes for a recovery in the under-pressure sector, with the supermarkets dominating the risers' board as the FTSE 100 Index added 26.9 points to 6780.7.
The improvement comes after the top-flight suffered its worst week since December, when it was down nearly 200 points last week, followed by further falls on Monday and Tuesday.
Fears over the crisis plaguing Greece have dragged stock markets lower, but they steadied today as the debt-laden's prime minister headed to Brussels for more talks.
Germany's Dax and France's Cac 40 both turned higher.
On currency markets, the pound rose despite official figures showing the manufacturing sector shrank by 0.4 per cent in April.
The Office for National Statistics (ONS) data showed that the wider industrial production sector posted better-than-expected 0.4 per cent growth, boosted by North Sea oil and gas production.
Sterling was up by a cent against the dollar at just under 1.55 and also added a cent against the euro to slightly below 1.37.
In stocks, sharp gains for Sainsbury's came after boss Mike Coupe said the group was "slightly ahead of where we expected to be" with sales volumes and transactions higher as it reported first quarter figures.
Mr Coupe said the business was "encouraged by some of the early trends" it was seeing and shares rose 11.9p to 260.9p.
Bernstein analyst Bruno Monteyne said: "Although on a standalone basis, minus 2.1 per cent like for like is not a good result, it is in line with inflation and continues to be better than peers."
Investors also piled into Tesco, up 8.1p to 210.2p, and Morrisons, up 6.4p to 177.8p.
Meanwhile, banks had a mixed session amid speculation that Chancellor George Osborne would announce changes to the controversial banking levy at his annual Mansion House speech in the City.
It is thought the move would pass on more of the burden to those with bigger UK asset bases such as Barclays and Royal Bank of Scotland.
Asia-focused Standard Chartered looked to be the main beneficiary, leading the top-flight risers with an increase of 5 per cent, or 55.2p, to 1089.2p.
Barclays was initially lower but later recovered its poise, adding 1.5p to 263.1p, while RBS edged 0.6p lower to 352p. Lloyds Banking Group was off 0.3p at 86.2p, while HSBC shed 3.5p to 610.2p.