UK midcaps slide to 8-month low as retailers tumble, yields jump

(Reuters) - The UK mid-cap index touched a more-than-eight-month low on Thursday, as retail stocks were hammered by disappointing Christmas trading updates, while an extended rout in the bond market weighed on overall sentiment.

Tesco (OTC:TSCDY ), Britain's biggest supermarket group, slid 1.7% after it maintained its full-year profit outlook.

Marks & Spencer (OTC:MAKSY ) reported a better-than-expected 8.9% rise in like-for-like food sales in the Christmas trading period, but it warned of cost and economic headwinds this year, sending shares down 5.2%.

The retail index dropped 2.9% to a near one-year low, with discount retailer B&M tumbling 13.4% after it lowered the top end of its annual profit forecast.

Greggs (LON:GRG ) Plc shed 10.4% after the baker and food-to-go retailer reported a modest 2.5% growth in fourth-quarter like-for-like sales, as tight-pursed Christmas shoppers indulged in fewer Festive Bakes, sausage rolls, and gingerbread lattes.

The FTSE 250 index of domestically oriented stocks dropped 0.7% by 0941 GMT. The mid-cap index was also pressured by a sharp rise in British borrowing costs on concerns about high borrowing in Britain and higher taxes on businesses planned by finance minister Rachel Reeves.

"The year ahead won't be all smooth sailing for the retail giants, as the sector gears up to battle imminent tax hikes," said Matt Britzman, senior equity analyst, Hargreaves (LON:HRGV ) Lansdown.

The benchmark 10-year gilt yields have spiked by a quarter point this week alone to their highest since 2008, while the 30-year gilts hit its highest since 1998.

However, a slide in the pound supported the exporter-heavy FTSE 100 , which was up 0.4% at a three-week high.



Miners such as Antofagasta (LON:ANTO ), Anglo American (JO:AGLJ ), Rio Tinto (NYSE:RIO ) rose between 2.4% and 4.8% as metal prices edged higher. [MET/L]

Uncertainties concerning U.S. President-elect Donald Trump's tariff plans and stronger-than-expected U.S. economic data in recent days have fuelled concerns about resurging inflation, prompting traders to scale back their expectations on the scale of rate cuts this year.

Source: Investing.com