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Tesco drags FTSE 100 lower

Published: 23:10 04 Jun 2014 AEST

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Tesco (LON:TSCO) registered its worst sales performance in two decades, dragging the  Footsie down towards 6,800.

The supermarket giant’s latest update was every bit as miserable as expected and was followed by a 1.4% fall from the share price to 293p.

It recorded a 3.7% drop in underlying UK sales in the last quarter, which represents its worst performance in 40 years.

Britain’s largest grocer is fighting a war on two fronts as it attempts to repel the threat posed by discounters such as Aldi and Lidl, while its usual adversaries, Sainsbury and ASDA, continue to ramp up the competitive pressure.

In the face of this intense competition, the retailer has entered into a price with its rivals cutting the costs on a host of the most important components of the weekly shop.

It is also making enhancements to its popular Clubcard scheme, pledging a cheaper online service and ‘refreshing’ more than 100 stores.

The news was ominous for rival Sainsbury’s (LON:SBRY), which fell 2%.

Falls from other heavyweight stocks, such as Vodafone (LON:VOD), down 1.5%, and Royal Bank of Scotland (LON:RBS), down 1.6%.

Medical devices group Smith & Nephew (LON:SN.) topped the chart, up 2.6%, on renewed hopes of a takeover.

By 2pm, the blue chip index stood at 6,811 after a 23-point decline.

In the small cap arena, Solo Oil (LON:SOLO) gushed 22% higher at 0.25p. The stock was helped by Ophir Energy (LON:OPHR) and BG Group’s (LON:BG.) sizeable gas discovery in Tanzania, where Solo and partner Aminex (LON:AEX) are looking for a farm-in partner.

There has also been plenty of interest in UK onshore oil and gas industry at the moment. Solo has a stake in the Horse Hill project near Gatwick Airport.

US-focused Rose Petroleum (LON:ROSE), another oil tiddler, jumped 21%. The stock is now up at 3.9p after a 400% rise in the last month.

Caza Oil & Gas (LON:CAZA) joined the party with a 13% share price jump.


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