The FTSE 100 has ended the day down 13.7 points or 0.25%, to 5,517.4, as Kuwait sold BP shares worth about $2bn, slashing demand for other heavyweight oil stocks, but investors bought retail stocks as expectations grew of Christmas cheer on the high street.
Concerns the holiday season of gift buying and sales would fail to rescue a lacklustre year had weighed on the sector, but food retailers like Morrison gained 6.25p, or 3.55%, to 182.25p, while Tesco moved up 8.5p, or 2.66%, to 327.5p. High street clothing stores also gained, with Next advancing 30p, or 2%, to 1,530p, while Marks & Spencer surged 6.75p, or 1.43%, to 479p.
Argos stores owner GUS also saw gains, up 3.69% to 970.5p, after Deutsche Bank said the firm could separate its Experian credit checking arm in the near future, creating value for shareholders.
Elsewhere, there was a profit warning from fashion store French Connection, causing it to fall 13.5p, or 4.91%, to 261.5p, while Associated British Foods dropped 6.5p, to 825.5p, after a trading update failed to inspire despite revealing business was a little better than last year.
Meanwhile, BP fell 1.7% to 640p, while Royal Dutch Shell shed 1.5% to 1,886p, but on the upside, miner Anglo American rose 40p to 1,903p, as spot gold prices raced to fresh 24 and a half year highs around $530 an ounce.
In the US the Dow Jones Industrial Average is down 3.12 points, or 0.03%, to 10,752, as a disappointing sales outlook by Intel and rating downgrade on IBM hurt sentiment, while an upbeat profit forecast from Eli Lilly has helped.
Intel shares have fallen nearly 1% to $25.47, extending an overnight slide after the company's eagerly awaited mid-quarter update gave a sales outlook that fell a shade below the average estimate of analysts. IBM shares have slipped 1.3% to $86.34, as UBS cut its investment rating on IBM to "neutral" from "buy".
Also weighing on the market is Merck, whose shares fell 2% to $29.10, a day after The New England Journal of Medicine said Merck withheld information about the cardiac side-effects of its arthritis drug Vioxx.
Elsewhere, Eli Lilly shares have risen 3.7% to $54.15, after the drugmaker forecast 2006 earnings to be above Wall Street expectations, fuelled by strong sales growth of newer drugs and a lower than expected tax rate.
Meanwhile, Alltel has gained 3.1% to $66.82, after it said it would spin off to shareholders its local-telephone unit and merge the business with Valor Communications Group in a deal worth $4.9bn.IFAonline
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