Market update - 10 December

The FTSE 100 was up 8.11 points at 4389.37 while the FTSE climbed to 6251.08, up 99.45 points, at noon.

Marks & Spencer traded lower, losing 4.72 per cent or 11.75p to 231.75p, after Morgan Stanley said the retailer was among those most likely to disappoint this Christmas.

“Christmas is shaping up to be the worst in many years for the general retailers,” the broker said, arguing that retailers that expect to see an improvement in second half performance due to easier comparables and those that were exposed to big-ticket discretionary items were most at risk during this festive season.

Kesa Electricals, down or 5p at 100p, and DSG International, up 1.75 at 14.5p after Nomura moved the stock to “buy”, are the other two most likely to suffer, according to Morgan Stanley.

HMV, up 1p at 107p, and Sainsbury’s, up 3p at 299p, on the other hand, might surprise with a better than expected performance. The former may benefit from space left vacant by the collapse of Woolworth’s while the latter is well positioned to attract customers trading down from Waitrose and M&S.

Moving up

Rio Tinto was the strongest on the FTSE 100, gaining 14.55 per cent or 183p at 1441p, after saying that it was committed to reduce net debt by $10bn by the end of 2009. To meet its goal, the miner unveiled a series of initiatives, including 14, 000 job cuts and a reduction in net capital expenditure guidance for 2009, which were welcomed by the market. The announcement follows BHP Billiton’s decision last month to abandon its planned takeover of Rio. BHP, up 55p at 1212p, had said that it had decided to walk away owing to, among other factors, the prospective levels of debt at the combined group.

Elsewhere, transport group Stagecoach was strong, up 4.28 per cent or 5.5p at 133.9p. The stock looks set to relegated from the FTSE 100 when the results of the index reshuffle are announced after close today.

Moving down

Home Retail Group, which is expected to win a place among the blue chips this evening, fell back, losing 7.16 per cent or 17.25p at 223.75p as investors took profits.

On the FTSE 100, BAE Systems was down 1.77 per cent or 6.25p at 347.75p after HSBC switched its stance on the stock to “underweight” from “neutral”.