LONDON MARKETS: Tesco Slides After Warning, Curbs FTSE 100 Gain

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Supermarket chain Tesco tumbled at the open on Friday after issuing a profit warning, capping gains for the FTSE 100, which was on track for its first monthly gain since May.

Tesco shares (TSCDY) slumped 8.1% after the company warned on profit for the third time in three years, saying it will slash its interim dividend and reduce capital expenditure, as it battles with fierce competition.

The company -- which is the U.K.'s largest retailer -- now expects full-year trading profit in the range of 2.4 billion pounds ($3.98 billion) to GBP2.5 billion.

Other supermarket chains were hit by the downbeat Tesco news, with shares of J Sainsbury PLC 5.3% lower, Wm Morrison Supermarkets PLC off 3.6% and Marks & Spencer Group PLC down 3.3%.

More broadly in London, the FTSE 100 index rose 0.2% to 6,819.07, partly recovering from a 0.4% decline on Thursday that was spurred by renewed tensions in Ukraine. For August, the benchmark was on track for a 1.3% gain, which would be its first monthly advance since May.

Among stocks climbing on Friday, miners staged a rebound after sharp losses on Thursday. Shares of Rio Tinto PLC (RIO) added 0.8% and BHP Billiton PLC (BHP) picked up 0.7%.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires