Retailers help take Britain's FTSE to new record high close

By Kit Rees

LONDON (Reuters) - The UK's top share index climbed to a new record closing level on Tuesday as Morrisons led a buoyant retail sector on the back of a well-received Christmas trading update.

Britain's blue chip FTSE 100 (.FTSE) index ended up 0.45 percent at 7,731 points.

Shares in Morrisons (MRW.L) were among the best performers on the FTSE, up 2.4 percent after the supermarket chain beat sales expectations in the all-important Christmas trading period.

That lifted other British food retailers, as shares in peers Marks & Spencer (MKS.L) and Sainsbury (SBRY.L) rose 2.4 percent and 3.1 percent respectively.

"The Morrisons update is clearly better than expected," said Mike van Dulken, head of research at Accendo Markets.

"Marks has got the double benefit of both food and clothing and houseware. Next gave a good update from the clothing and the houseware section, Morrisons is giving a good update for the grocery, so perhaps Marks can benefit twofold there," van Dulken added, referring to Next's upbeat Christmas update last week.

Sainsbury, Tesco (TSCO.L) and Marks & Spencer are all due to give updates on Christmas trading this week.

Concerns over how UK retailers have fared over the holiday season were raised after Debenhams (DEB.L) and Mothercare (MTC.L) saw sharp share price drops following their updates.

Industry figures showed that shoppers feeling the pinch from inflation scaled back on almost everything except for food in the last three months of 2017.

That led to the biggest fall in non-grocery spending since 2009.

"Food sales have managed to shrug off the consumer slowdown, after all, eating three meals a day is more important than having the very latest iPhone," Laith Khalaf, senior analyst at Hargreaves Lansdown, said in a note.

Utilities were the only sector to suffer, following a pan-European trend with United Utilities Group (UU.L), Severn Trent (SVT.L) and Centrica (CNA.L) down 3.6 percent, 3.2 percent and 2.5 percent respectively.

Elsewhere, shares in Persimmon (PSN.L) declined 1.2 percent after a trading update, with the housebuilder saying that it was hoping to achieve a modest increase in sales this year.

Shares in Micro Focus (MCRO.L), which plunged nearly 17 percent in the previous session after saying its revenue would fall this year after disappointing sales from the software assets it bought from Hewlett Packard Enterprise (HPE.N), recovered slightly and were up 2.6 percent.

Analysts at Barclays said that the fall in Micro Focus was so harsh it was hard to justify.

"We would look through the volatility in trading and use this as an opportunity," they said in a note.

(Reporting by Kit Rees, additional reporting by Helen Reid and Julien Ponthus; Editing by Kevin Liffey and Susan Fenton)