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City gives Tesco a small vote of confidence

TESCO shares rallied as the departure of chief executive Philip Clarke proved sufficient to offset the City's alarm over another profit warning.

Shares rose three per cent at one stage on hopes that Unilever's personal care chief Dave Lewis can restore the fortunes of Britain's biggest supermarket.

Elsewhere, the wider market saw subdued sentiment amid global tensions over the crash of the Malaysia passenger jet in Ukraine, with the FTSE 100 Index 21 points lower at 6728.4.

Investors are concerned about how Western governments, already alarmed by Russia's support for separatist rebels in the country, will react amid a chaotic recovery effort at the disaster scene and a defiant reaction from president Vladimir Putin. Mr Putin warned that the MH17 crash must not be used for "political" advantage but Chancellor George Osborne said the UK was prepared to take an "economic hit" in order to put pressure on Moscow over the Ukraine crisis.

Sterling was close to a five-year high against the dollar, at 1.71, as traders bet that a cooling housing market will not prevent the Bank of England from being the first major central bank to increase interest rates since the financial crisis.

The pound also held steady against the euro, at 1.26.

Among shares, the grocery sector was brought into sharp focus by the announcement of Mr Clarke's departure from Tesco.

Shares in Tesco ended the day one per cent or 3.65p higher at 288.65p, despite the announcement coming alongside a warning that profits for the first half of the year would be "somewhat below expectations".

Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers, said the appointment of an outsider had "provided some hope" but that the task for the new boss "remains sizeable" amid the challenge from discounters Aldi and Lidl.

Rival Morrisons was one of the leading fallers in London's top flight, shedding more than 2%, or 4.3p, to 173.7p, while Sainsbury's was off 6.4p at 318.3p.

Unilever shares initially faded but later levelled out, marginally ahead by 10p to 2642p.

Elsewhere, house builders took a hit after property website Rightmove said house prices had fallen by 0.8% this month, the first drop so far this year.

In the top flight, Barratt Developments slipped 9.4p to 354.2p while Persimmon dropped 29p to 1246p.

In the FTSE 250, Crest Nicholson was 6.2p lower at 333.3p and Bellway fell 48p to 1492p.

The biggest risers on the FTSE 100 were Fresnillo, up 14.5p at 915.5p, Tesco up 3.7p at 288.7p, Antofagasta up 10p at 815.5p and AstraZeneca up 50p at 4390p.

The biggest fallers on the FTSE 100 were Barratt Developments down 9.4p at 354.2p, Morrisons down 4.3p at 173.7p, Persimmon down 29p at 1246p and International Airlines Group down 6.8p at 323.1p.

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