Shares in Marks & Spencer have nosedived after it warned that efforts to shore up its clothing arm would hit profits.
The high street bellwether was the biggest faller on the London market, slumping more than 7%, as new boss Steve Rowe unveiled his overhaul plans as the group posted a 4.3% rise in underlying pre-tax profits to £689.6 million for the 53 weeks to April 2.
But the FTSE 100 Index was 37.8 points higher at 6257.2 as it shrugged off the bleak update from the retailer thanks to a rally from the banking stocks.
HSBC was up 9.5p to 443.8p after it moved to strengthen its capital base by raising two billion US dollars (£1.4 billion) from selling perpetual subordinated contingent convertible securities.
Lloyds Banking Group rose 0.9p to 73.4p, Standard Chartered climbed 10.6p to 546.6p, while Royal Bank of Scotland was the biggest riser, surging more than 3% or 7.9p to 253.1p.
Oil giant Royal Dutch Shell was also on the front foot, rising 22p to 1683p, as the price of oil edged closer to the 50 dollar mark, stepping up 1.3% to 49.26 US dollars a barrel.
Across Europe, Germany’s Dax was 1.2% higher and the Cac 40 in France rose 0.6% in the wake of Greece winning an essential batch of bailout funds from international creditors following an agreement among the 19 eurozone finance ministers.
Sterling was up 0.2% against the US dollar at 1.464, amid further economic warnings over Brexit, with the Institute for Fiscal Studies publishing a report stating that Britain would have to stomach two more years of austerity if it left the European Union.
The pound was also higher against the euro at 1.313.
In stocks, M&S was 34.1p lower at 410.p as the group said investment in its revamp as well as tough conditions on the high street would “have an adverse effect on profit in the short term”.
The firm also dealt a blow to 11,000 staff as it announced plans to close its final salary pension scheme for future service accrual to existing members, having already closed it to new members since 2002.
However, Royal Mail raced ahead after communications regulator Ofcom stopped short of imposing price controls on the firm following a review into the postal market.
Ofcom said the declining letters market and increased competition in parcels means it sees no need to “impose new price controls on Royal Mail’s wholesale or retail products”.
Shares were up more than 2% or 11p to 532p.
Dixons Carphone was 3.1p higher at 451.2p as it shrugged off fears of a high street slowdown after posting a strong set of results for the fourth quarter and raising its profit guidance for the year.
The retailer said it expects profit to come in at between £445 million and £450 million, 17% more than last year.
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