UK retail stocks rally on government's household support package

LONDON (Reuters) - Shares in British retailers rallied on Thursday on hopes that a new 15 billion pound ($19 billion) package of support for households struggling to meet soaring energy bills will encourage them to keep spending.

Britain announced a 25% windfall tax on oil and gas producers' profits alongside the package of household support.

That sparked a rally in retail stocks that have been battered in recent months over the feared repercussions of the cost-of-living crisis.

Shares in Ocado were up 11.2% at 1339 GMT, while Marks & Spencer was 8.5% higher, B&M had added 7.4%, Next was up 6.6% and Primark owner Associated British Foods had risen 3.9%.

British consumers are still facing the biggest squeeze on disposable income since at least the 1950s, with inflation at 9% and set to climb further.

On Wednesday, M&S said Britons would not feel the full force of the cost of living crisis until the autumn. Despite Thursday's rally, M&S shares are still down 35% this year.

(Reporting by James Davey; Editing by Hugh Lawson)