THE scale of Tesco's turnaround challenge sent shares in the supermarket giant south, adding to another lacklustre performance by the FTSE-100 index.
A host of writedowns by Tesco chief executive Philip Clarke led to the chain's first fall in profits in two decades, making it one of the biggest fallers on the blue-chip index.
Ongoing worries about the weakness of the eurozone, plus weak earnings on Wall Street, also led to another day of losses on stock markets across Europe.
Having topped 6500 in mid-March, the Footsie closed down 60.37 points at 6244.21, a drop of almost 1%.
Falls on European exchanges were even steeper, with the Dax in Frankfurt and the Cac 40 in Paris both down 2.3%.
Fears over the strength of the economic recovery in Germany were fuelled by a weak survey on investor confidence.
Weakness in the UK jobs market – with unemployment rising by 70,000 to 2.56 million – also weighed on sentiment. The pound was down 0.7% against the greenback at 1.52 US dollars. But sterling gained 0.3% on the euro to 1.17.
Tesco's surprise £800 million writedown on the value of its UK property assets drove annual profits at the UK's biggest supermarket down 51% £1.9 billion.
Its shares were off 15.1p to 369.8p, a 3.9% fall, as the chain booked a £1.2bn hit from its decision to pull the plug on its American venture, while it also sounded warning notes about Asian markets.
Darren Shirley, retail analyst at Shore Capital, said: "In some respects, Mr Clarke has had to go backwards to move forwards, reflecting to our minds a more challenged business and more challenging market conditions than his predecessors faced.
"To his credit though, he has not shirked difficult decisions that we believe have been necessary to right the 'good ship' Tesco."
There were some pockets of good news, with Burberry shares up 23p at 1289p, or 1.8%, following a better-than-expected trading update, including a 9% rise in total revenues to £1.1bn for the six months to March 31.
And fund supermarket Hargreaves Lansdown rose 49p ahead at 949p, topping the Footsie leaderboard after it reported a record level of assets under administration, increasing by £4.7bn in the first three months of 2013 to £35.1bn.
Outside of the top flight, JD Sports Fashion managed to gain 3p to 745p despite big losses in its Blacks and Millets outdoor clothing business causing full-year profits to decline by 18% to £55m.
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