The FTSE’s record 11-day rally came to an end on Tuesday and retail underperformed the market as good official sales figures and reassuring trading updates were cancelled out by a bearish view on the sector released by credit rating agency Fitch.

In a note published on Monday, Fitch said the recent flurry of positive news was more down to temporary factors such as the warmer spring weather and an earlier start to summer Sales. Fitch sees no lasting recovery until 2011, with rising unemployment meaning that retail’s recovery will lag behind the broader economy.

But following the upgrades to profit forecasts that came hot on the heels of the updates from industry giants Kingfisher, Next and Morrisons last week, other retailers also benefited from improved sentiment.

Recommending buy, UBS upgraded its profit forecast and price target for Home Retail Group, saying that the positive news from peers such as Kingfisher and John Lewis meant there were unlikely to be any nasty surprises in the second quarter, meaning Home Retail Group “will be ahead of the game for the first half”.

Halfords followed the trend for reassuring updates with like-for-like sales up 1.3 per cent for the 13 weeks to June 27, although they were flat with the timing of Easter taken into account. Cycling, camping and car maintenance drove the performance, but falling sat-nav sales held it back.

Investec analyst David Jeary described the performance as “solid” and, retaining a buy recommendation, upgraded its profit forecasts for this year and next.

HMV’s shares took a hit in early trading on Wednesday, down more than 5 per cent amid press speculation that highly rated chief executive Simon Fox is being lined up to take over as chief executive at ITV.

On AIM, luxury department store Liberty confirmed press reports that the retailer was exploring options to bring in new investors, saying it had appointed advisers to examine how the business could be developed and expanded both in the UK and internationally. Property company MWB owns about two thirds of the business.

United Carpets recorded a full-year fall in profits to £1.4m, down from £1.7m the year before. Sales were resilient across its largely franchised network of stores up more than 10 per cent to £65.1m, reflecting like-for-like growth of 1.2 per cent.

Geeks favourite Games Workshop grew profits sevenfold to £7.5m. Sales at constant currency were up 3.3 per cent to £113.9m.