Tesco gains help keep FTSE higher

LONDON -

The FTSE 100 held firm on Thursday lifted by strength in retail giant Tesco, which beat sales expectations over the Christmas period, outweighing falls by its competitors.

Tesco rose 2.4 percent, providing around half of the FTSE 100 <.FTSE> index's gains, after the world's third largest retailer posted its highest sales growth in three years, offering signs that a turnaround strategy is beginning to show results.

"The market consensus of the shares as a strong hold may come under a little upward pressure if investors are convinced that the turnaround plan has already gained some traction," said Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers.

Retail peer Marks & Spencer, however, was the top blue chip faller, down 4.1 percent after reporting a steep drop in its non-food sales in the Christmas quarter.

At 11:41 a.m., the FTSE 100 <.FTSE> was up 7.68 points, or 0.1 percent, at 6,106.33, still struggling to sustain a break through strong resistance at the 6,100 level a day after hitting its highest level since May 2008.

"The technical picture remains positive and the path of least resistance is still to the upside but the fact that the FTSE has now become relatively overbought does suggest that it might not be too long before profit-taking sets in," Charles Stanley technical analyst Bill McNamara said.

Heavyweight miners <.FTNMX1770> also lent the market their strength, gaining with copper prices after trade data showed total exports in China, the world's top metals consumer, recovered in December.

BUNZL BOOSTED

Bunzl topped the FTSE 100 <.FTSE> gainers, ahead 4.7 percent as the international distribution and outsourcing group unveiled three acquisitions - two in the United States and one in South America - prompting Numis Securities to upgrade its rating for the stock.

"We believe the acquisitions today will focus investor attention on the opportunities for acquired growth and we see the shares moving higher," Numis said in a note.

Defensively-percieved utility stocks were also in demand, with United Utilities up 1.6 percent, after Britain's Office for National Statistics said a review of RPI had concluded that it should not make any major changes to the measure of UK inflation.

"No change to RPI is effectively good news for the price regulated utilities, as any of the proposed changes in the calculation of RPI would have led to it being lower, leading to lower indexing of revenues and regulatory asset values," Seymour Pierce analyst Angelos Anastasiou said in a note.

But other more defensive sectors, such as food and drink companies which tend to outperform in tough economic times, were weaker.

Sugar firms Tate & Lyle and AB Foods stood out, down 1.1 percent and 1.6 percent respectively, as a third-quarter trading update from German peer Suedzucker disappointed, with shares in Europe's largest sugar company down 5.5 percent in Frankfurt.

(Reporting by Jon Hopkins)