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Tesco announces £1billion recovery plan

Some relatively good news for the UK came in the form of a lower than expected rise in the unemployment claimant count which rose by 3,600 in March to 1.61 million. Despite this, the figure represents the highest total since the autumn of 2009. It was also reported by the Office for National Statistics that the unemployment rate came off its 12 year high of 8.4% to 8.3% last month. Minutes from April’s Bank of England Monetary Policy Committee meeting showed that the previously dovish Adam Posen had retracted his calls for further quantitative easing, meaning that only 1 out of the 9 member committee currently supports further asset purchases. This was supportive of Sterling which made decent gains against the Euro the US dollar.

Tesco released results today that were keenly awaited following a profit warning earlier in the year that wiped more than 20% of its share price after a disappointing Christmas. It posted a pre-tax profit of £3.84billion through 2011, an increase of 5%. It also released what has been dubbed a recovery plan, after voices suggesting the supermarket is struggling have grown louder this year. The group said that it was to reign in its physical UK expansion, and instead focus on its internet exposure, including a doubling of stores offering “click & collect” pickups. There were also plans to invest £1 billion and recruit over 8,000 people to improve the shopping experience in its stores, something it has been accused of overlooking in recent years. Despite posting decent gains in early trade as investors welcomed the recovery plan, the shares ended the day lower by 2.2% to 321p.

It was generally a negative day for stock markets, particularly in Europe as concerns lingered that the banking system in Spain was in trouble as non-performing loans as a percentage of total lending jumped to 8.2% in February compared with 7.9% in January. The news hurt banking stocks across the continent, with the Spanish IBEX down 4%. Despite financials significantly lower in the UK, and a number of large losses as stocks went ex-dividend, the FTSE 100 only lost 0.4% to 5745. This compared with the 1% and 1.6% losses seen on the German and French markets.

This was posted in Bdaily's Members' News section by James .