By Sudip Kar-Gupta
LONDON (Reuters) – The FTSE 100 hovered near one-month lows on Thursday, pegged back by a drop in the shares of supermarket retailers after a profit slump at Wm Morrison.
The blue-chip FTSE 100 index, which had fallen for the last four sessions in a row, slipped 0.1 percent to 6,611.57 points in early-session trading, close to a one-month intraday low of 6,598 points that was reached on Wednesday.
A 9 percent share price drop at Morrison, Britain’s fourth-biggest grocer, also knocked down its rivals, with Sainsbury sliding by around 7 percent while Tesco fell 3.8 percent.
Trading volumes in Morrison, which also cut its profit expectations, were 1.6 times above the stock’s 90-day average, while volumes on the FTSE stocks as a whole stood at around 0.1 times the 90-day average.
Tesco and Sainsbury took the most points off the FTSE 100, and traders said the UK stock market was vulnerable to further falls over the next few weeks that could push it down by another 1-2 percent.
“Investors are running for cover at the moment. I could see the FTSE falling down to the 6,500-point level soon,” said Berkeley Futures associate director Richard Griffiths.
Central Markets trading analyst Joe Neighbour said the FTSE 100 could find some support at 6,580 points, the index’s 200-day moving average – a level used by some technical traders to buy into an index.
However, Neighbour felt that if the FTSE fell below that level, it was then vulnerable to a fall to its 2014 low of around 6,417 points, reached in early February.
“Investors could get worried if the FTSE breaks below that 200-day moving average level,” he said.
The FTSE 100 rose 14.4 percent in 2013 to record its best annual gain since 2009, and reached its highest level in around 13 years in early January this year.
However, the FTSE has since lost ground and is down around 2 percent since the start of 2014, as worries over geopolitical tensions in Ukraine and concerns about a possible Chinese economic slowdown have pegged back global stock markets.
(Editing by Kevin Liffey)
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