Stores shot ahead of the All-Share index as low valuations and vague talk of takeovers - such as potential private equity interest in Home Retail Group - prompted interest.

Ratings agency Fitch also provided a likely fillip on Wednesday, when it said it expects rating stability among retailers despite the uncertain consumer outlook.

The agency said: “This reflects Fitch’s view that business conditions will not materially worsen and that companies will continue to manage their businesses and balance sheets in a conservative manner.”

Retailers that have “P&L self-help opportunities” were flagged by Citi, which likes DSGi, Kesa, Kingfisher and Signet. All four are likely to benefit from their presence in overseas markets, which are showing impressive or improving sales trends. Kesa, Kingfisher and Signet are also “significant beneficiaries of weak sterling currency translation” as a result of euro and dollar earnings.

Oriel reiterated its buy stance on DSGi ahead of today’s strategy update from the retailer. The broker said: “DSGi has come a long way from the days when it was seen as a weak electrical goods retailer battered by falling margins and rising costs.

“The strategy has resulted in a dramatic reversal in this view and we believe Friday’s update will highlight that there is still more to go for.”

Despite strong results from Morrisons, investors failed to put food stocks in their baskets and the grocers as a group fell over the week. Collins Stewart reiterated its buy advice on Tesco with a price target of 490p.

The broker said that conventional valuation metrics fail to reflect the potential of immature space, and maintained: “We have calculated that an additional £276m of operating profit is virtually guaranteed as 26 million sq ft of space in the UK, Europe and Asia matures.”

JJB Sports was up as the Competition Commission cleared the sale of 31 of its shops to Sports Direct.

The commission said it did not believe that higher prices or a reduction in shoppers’ choice would result from the deal.

Buy HMV, recommended Seymour Pierce ahead of next Friday’s strategy update. The broker expects to hear measures to cut costs and optimise the store portfolio, especially of books chain Waterstone’s, a wider recovery plan for Waterstone’s and to generate growth in new product categories.

Famous department store Liberty revealed a sale and leaseback deal on its flagship property, raising £41.5m. The transaction paves the way for a likely sale of the retailer to a private equity buyer (Retail Week, last week).

Next Thursday will bring a health check for the sector when retailers including Kingfisher, Next and Signet update and ONS sales data is released.