Market Report: Tesco is top performer as City tips it to turn the tide

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Number crunchers at Barclays made Tesco ripe for stock-picking as they upgraded the struggling supermarket to overweight — their version of a Buy tip.

Shares in the group jumped 8p, or 6%, to 147.2p as analyst James Anstead said Tesco’s share-price slump — it has fallen 45% since April and underperformed rivals Sainsbury’s and Morrisons recently — has left it “at attractive levels”.

Anstead warned of “numerous headwinds” still facing Britain’s biggest supermarkets, including increasing competition from German discounters Aldi and Lidl and the introduction of the Living Wage, “although we do not expect a visible impact in the near future,” he added.

It is a boost for the stock ahead of next week’s Christmas trading statement, which he expects to be “less worrisome than the market’s worst fears”.

Tesco was the top performer as the FTSE 100 recovered from yesterday’s beating, up 50.86 points at 6004.94, with investors reassured by a rise from China’s volatile stock market.

What’s behind the rise of discount supermarkets?

BHP Billiton was 6.9p richer at 680.6p after confirming waste released from the burst dam at its Samarco iron-ore mine in Brazil was “significantly less than some initial estimates”.

The disaster, for which the Brazilian government is seeking up to $5 billion (£3.42 billion) in damages, killed 17 people and left hundreds in nearby villages homeless.

On the mid-cap index, Ocado surged 11.18p, or 4%, to 303.38p, continuing a rise that began yesterday afternoon as takeover rumours circulated about the online supermarket. 

An encouraging trading statement from Spire Healthcare made the private-hospitals group 12.8p healthier at 322.5p as it predicted full-year revenues will be at least 3% higher than last year, assuming the new NHS tariff is confirmed in the next couple of months. 

Paysafe, which has just been promoted to the main market, jumped 27.23p, or 7.5%, to 389.73p as the online payments firm said annual revenues and profits will be ahead of expectations. 

It now has a market value of £1.9 billion and is expected to slot into the FTSE 250 at the next index reshuffle.

Panmure Gordon dragged AIM-listed Boohoo into the retail carnage as it cut its rating on the online fashion house to hold after a 61% rise in a year, causing shares to fall 0.5p to 37p.


Singer CharliXcX collaborated with Boohoo on a fashion line (Picture: Boohoo)

Elsewhere, photo-booth operator Photo-Me flashed 13p higher to 162p with business in Japan booming after the introduction of compulsory photo IDs for citizens.

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January 9, 2016 |
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