LONDON (Reuters) - Britain's main stock index .FTSE rose 0.4 percent to within a whisker of its recent record high, reversing an earlier swoon as oil majors jumped higher and the U.S. dollar gained back ground against sterling, helping UK-listed dollar earners.
Retailers stole the rest of spotlight after high street stalwart Next delivered a strong Christmas update.
Next (NXT.L) jumped 6.7 percent to the top of the index after its trading update surprised investors, with a sales beat driving the company to upgrade its full-year profit forecast.
Cheery results from the first UK retailer to report on the Christmas season caused a rally in retail stocks across the market, delivering relief to investors in a sector facing significant challenges.
Next’s update was in stark contrast to the start of 2017 when the retailer issued a profit warning and its shares sank.
But Wednesday’s gains only brought it back to November levels before a third-quarter sales miss, and some were sceptical about how significant this sales performance was.
“The Next share price rollercoaster continues,” said Mike van Dulken, head of research at Accendo Markets.
“Management’s update-by-update tinkering of guidance and sharp share price reactions only goes to reinforce how shareholders remain at the mercy of the UK consumer from one season to the next and exposed to short-termism.”
The gains across the board in retail were likely to have squeezed the many short sellers betting on the sector’s downfall. Of the top ten most-shorted FTSE 100 stocks, five are in retail.
EU regulatory reforms under the MiFID II market directive that came into force on Wednesday had little early impact on the market, traders said.
For the graphic 'UK retailers underperform since Brexit', click - reut.rs/2CfEDCI
Reporting by Helen Reid; Editing by Robin Pomeroy