FTSE Movers: M&S rises on surprise growth; Vedanta extends gains

Marks & Spencer (MKS.L) led the FTSE 100 stock index higher on Wednesday after the high street stalwart posted surprise growth in sales, while Vedanta Resources (VED.L) extended recent gains amid progress on a takeover deal in India.

M&S shares jumped 18.4p, or 5.4%, to £3.58 on the back of its fourth-quarter trading statement. The stock has lost 8.6% of its value over the past three months, amid fears that cash-strapped shoppers will abstain from splashing out on the retailer’s products.

However, M&S said UK like-for-like sales – the closely watched industry measure – gained 0.1% in the three months to 2 April, defying market expectations of a decline. Yet the group, Britain's biggest clothing retailer, did warn that it expected trading to get tougher amid government spending cuts, rising inflation and fears over about higher interest rates.

In a research note, analysts at Numis said they had been expecting to lower their pre-tax profits forecast for M&S for the year to March 2012, ‘given the macro headwinds.’

‘While this is the case, based on the latest guidance, we are encouraged that MKS should still make progress at the profit before tax level versus March 2011,’ they added. ‘The business is carrying solid momentum, has a sensible medium-term plan and, on c.10x [price to] March 2012 earnings and a 5% dividend yield, is offering value.’

The trading statement came after a string of British retailers have issued profit warnings in recent weeks, most recently HMV (HMV.L) on Tuesday. Following the update, Next (NXT.L) rose 60p to £20.91, Dixons Retail (DXNS.L) gained 0.27p to 12.07p and Mothercare (MTC.L) was 4.9p higher at £3.95.

Vedanta climbs higher

Vedanta Resources, meanwhile, climbed £1 to £53.25 after saying its Sesa Goa subsidiary has received clearance from Indian regulators to proceed with an open offer for as much as 20% of the shares of Cairn India. Sesa is required to launch the open offer by April 11.

The stock is a top ten holding in Edward Legget’s Standard Life Investments UK Equity High Alpha fund.

Other miners also gained as copper prices rose and gold hovered close to an all-time high. Randgold Resources (RRS.L) added £1.05 to £53.33, Fresnillo (FRES.L) was 30p higher at £16.51 and Kazakhmys (KAZ.L) advanced 17p to £14.50.

TUI Travel (TT.L) was another big gainer, adding 6p to £2.35, amid takeover hopes and reportedly on the back of an upbeat note from Citigroup.

Pearson declines

Pearson (PSON.L) was the biggest loser on the FTSE 1OO, shedding 32p to £11.40, after the Financial Times publisher went ex-dividend - so new investors buying the shares would miss out on the firm's recent payout.

Misys gains

Among midcap stocks, Misys (MSY.L) climbed 11.7p to £3.38, after the financial software provider said third-quarter sales rose 7% to £85 million, as it booked new capital markets, treasury and banking orders.