By This Is Money Reporters

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12.50: Weakness in supermarket stocks was the main feature on the London share market at lunchtime, with the Footsie extending its earlier modest falls on expectations for falls by US stocks after further disappointing data from China, which has been the main engine of global growth.

The FTSE 100 Index was 14.2 points lower at 6,606.8 as China’s uncertain economic prospects continued to worry investors.

Government figures showed industrial production rose by a lower than anticipated 8.6 per cent at the start of this year, while retail sales also grew by less than hoped for, putting pressure once more on mining issues, with China the world’s biggest consumer of commodities.

Retail winner: Although supermarket stock took a pounding today, Home Retail Group was a good gainer after strong trading news at Argos and Homebase

Retail winner: Although supermarket stock took a pounding today, Home Retail Group was a good gainer after strong trading news at Argos and Homebase

Shares in the supermarket sector were rocked today after William Morrison reported annual losses of 176million and warned of more pain ahead as discounters continue to eat into the market shares of the Big Four players.

Announcing a 2.8 per cent drop in like-for-like sales for the last year, Morrisons chief executive Dalton Philips said the grocery sector was undergoing the biggest structural shift since the advent of supermarkets in the 1950s.

He announced plans to take on the likes of Aldi and Lidl with three years of investment worth 1 billion but this was not enough to prevent shares dropping 20.75p to 212.5p.

Among other grocers, market leader Tesco dropped 14.6p to 299.7p and Sainsbury’s lost 24.3p to 308.85p and Marks & Spencer was 9.7p lower at 464p.

There was better news elsewhere in the retail sector after Argos and Homebase owner Home Retail Group upgraded its profit guidance for the second time this year.

Chief executive Terry Duddy, who is retiring today after 15 years with the Argos business, said profits for the year to March 1 will be slightly ahead of current market expectations of up to 111million.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers said: ‘The group’s Chief Executive is leaving on a high. Profit expectations have again been raised, with Mr Duddy passing the baton against a backdrop of clear growth momentum.

‘Online sales at Argos are on an upward trajectory, while Homebase appears to be another beneficiary of the government’s Help to Buy scheme and its revival of the UK housing market.’

The update lifted Home Retail shares in the FTSE 250 index to their highest level since June 2011, up 12.3p to 217.4p.

B&Q and Screwfix owner Kingfisher benefited from the Homebase update in the FTSE 100 index as its shares rose 7.3p to 410.2p.

Centrica was the biggest riser in the top flight after broker HSBC highlighted the British Gas owner’s strong upstream prospects as it increases its focus on more productive areas such as Norway and the United States.

HSBC upgraded its recommendation on Centrica to overweight, helping the shares gain 7.7p to 335.6p.

However, energy rival SSE shed 1.0p at 1,424p and National Grid dropped 9p to 824p after the pair were downgraded in the same note from HSBC.

Among the handful of other blue chips gainers, William Hill was also higher, up 0.9p to 382.3p as the Cheltenham horse racing festival continued, with bookmakers seen as winners with a dearth of favourites coming in so far.

Further down the food chain, gaming group Bwin.Party added 5.7p to 127.8p after it said the summer World Cup should help it return to growth after problems in Greece and a move away from riskier markets hit its figures in 2013.

Peel Hunt analyst Nick Batram at Peel Hunt said: ‘Full year numbers were as bad as expected but 2013 should represent the nadir in the Group’s fortunes. However, if management fail to deliver the anticipated recovery in 2014, it is possible that others will try.

Activist investor Spring Oil recently acquired at 6 per cent stake in Bwin.party.

But oil & gas punter’s favourite  Gulf Keystone Petroleum shed over 10 per cent, down 15.4p to 128.5p after issuing a disappointing update on its Shaikan development in Iraq.

The firm, which is moving up to the London Stock Exchange’s full list from Aim on 24 March, said a third party audit of the Kurdistan reserves showed total reserves of 9.38billion barrels of oil, lower than earlier estimates of 13.7billion barrels.

10.30: The Footsie was modestly lower by mid morning, licking its wounds after falling for the last four sessions as investors digested further weak data from China, with supermarket firm William Morrison the major casualty after its annual results disappointed.

The FTSE 100 index was just 2.2 points lower at 6,618.2 after the first two and a half hours of trading, albeit not far from the one-month intraday low of 6,598 points that was reached yesterday.

The UK blue chip index rose 14.4 per cent in 2013 to record its best annual gain since 2009, and reached its highest level in around 13 years in early January this year.

Supermarket slump: Morrisons saw its dive after it posted annual losses of 176million and downgraded forecasts for the current year

Supermarket slump: Morrisons saw its dive after it posted annual losses of 176million and downgraded forecasts for the current year

However, since then the FTSE 100 has lost ground and is down around 2 per cent since the start of 2014, as worries over political tensions in Ukraine and concerns about a possible Chinese economic slowdown have pegged back global stock markets.

Fresh evidence of that slowdown in growth in the world’s second-largest economy arrived today, with China’s industrial output growth coming in below forecasts at 8.6 per cent for the combined January and February period, with retail sales also weaker than expected.

Anita Paluch,a trader at Varengold Bank said: ‘The motor for growth for about  past ten years has delivered another batch of data that is cause of concerns for investors around the globe – both retails sales and industrial production numbers out of China came lower than expected, raising questions as to whether the growth target can be reached.

‘China is considered the world’s manufacturing power house, but right now it is facing issues of changing structure of the labor market – consumer market is growing, wages are rising, there is growing pool of highly skilled talent that needs to find work that again shows the need for the country to change its growth model.’

The main FTSE 100 faller today was Morrisons, which saw its dive 7 per cent after the struggling food retail chain posted annual losses of 176million and downgraded forecasts for the current year as well.

The update spooked other grocers such as Tesco after chief executive Dalton Philips said the growing threat of discount chains represented the biggest structural shift ‘since the 1950s and the advent of supermarkets’.

He announced plans to take on the likes of Aldi and Lidl with three years of investment worth 1 billion but this was not enough to prevent shares dropping 15.4p to 217.6p.

Among other grocers, Tesco dropped 10.2p to 304.2p, Sainsbury’s lost 20.4p to 312.75p and Marks & Spencer shed 9.7p to 463.9p.

But there was better news elsewhere in the retail sector after Argos and Homebase owner Home Retail Group upgraded its profit guidance for the second time this year.

Chief executive Terry Duddy, who is retiring today after 15 years with the Argos business, said profits for the year to March 1 will be slightly ahead of current market expectations of up to 111million.

The update lifted shares in the FTSE 250 Index stock by 4 per cent or 9.3p to 214.4p, leaving it at the highest level since June 2011.

B&Q owner Kingfisher benefited from the update, with its blue chip shares up 6p to 408.9p.

08.30: The FTSE 100 has opened up 1.3 points at 6,622.2, with worries about China expected to keep investors on edge after fresh evidence of a slowdown in growth in the world’s second-largest economy.

China’s industrial output growth came in below forecasts at 8.6 per cent for the combined January and February period, with retail sales also weaker than expected.

Some analysts said the figures pointed to 7 per cent economic growth this year, which would fall far short of a 7.5 per cent target.

Market watch: The ongoing Ukraine crisis is keeping traders on edge

Market watch: The ongoing Ukraine crisis is keeping traders on edge

The tense geopolitical situation in Ukraine is also forcing investors to trade cautiously. A resolution of the dispute in the near-term remains out of sight, with the European Union agreeing on a framework for its first sanctions on Russia since the Cold War.

Jonathan Sudaria said a little ‘highly speculative bargain hunting’ may be contributing to today’s higher open, but this was probably a matter of traders getting flat ahead of this week’s risk events in the Crimea.

‘As the diplomatic bickering gets more heated between the West and Russia, reports that [president Vladimir] Putin has casually moved troops, tanks and fighter planes to Ukraine’s border is surely to stir up traders’ intuition that something risk-off is on its way.’

The FTSE 100 fell 64.62 points to 6,620.90 yesterday. Shanghai and London copper prices have regained strength after plunging to multi-year lows in the previous session.

Stocks to watch today include:

WM MORRISON: The grocer posted its lowest profit in five years, slashed expectations going forward and said it plans to sell off 1billion of its 9billion property portfolio.

ROYAL DUTCH SHELL: The firm said it was cutting spending on American upstream operations – the exploration and production end of the oil business – by a fifth this year after it was impacted by losses in resources plays such as shale.

HOME RETAIL: The firm said annual profit would now be slightly ahead of the top end of market forecasts after it delivered a much better-than-expected finish to the year at its Argos and Homebase businesses.

F&C ASSET MANAGEMENT: Fund management company F&C Asset Management posted a rise in underlying earnings per share.

TRINITY MIRROR: The newspaper publisher posted a 2.6 per cent rise in full-year pre-tax profit to 101.3million after it countered falling revenue with tight cost management and lower interest charges.

CIRCASSIA: Biotech firm Circassia will list on the London stock exchange at 310p per share, the company said today. This is at the top of its price range and gives it a market capitalisation of about 581million.

GLAXOSMITHKLINE: GlaxoSmithKline said its non-inhaled treatment for a type of severe asthma met the main goals in two late-stage studies.

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