A welter of trading updates brought mixed news. Although retailers such as Game and Dunelm impressed, general retailers remained unpopular.

Debenhams was hard hit as gossips speculated it was close to breaching its banking covenants. The shares hit a low of 87.5p.

The food sector was up, however, after Sainsbury’s opened its books to Delta Two and Morrisons posted a profit rise (see below). Tesco unveils interims on Tuesday and Citigroup said it is a good time to buy.

The broker raised its price target for Tesco from 450p to 500p and is excited by prospects for the soon-to-be-launched US venture, Fresh & Easy.

Analyst Dave McCarthy noted: “The impending results may include its weakest UK like-for-like sales for many years, but sales growth has bottomed in the UK. Its growth prospects and valuation look compelling relative to peers and there is a clear trigger on the horizon with the imminent US market entry.”

DIY giant Kingfisher was down, despite interims that beat expectations. Problems in China and an uncertain second-half outlook worried investors. Landsbanki, advising hold, said: “The potential threat to earnings is too big for us to take a bull view on a stock where we see considerable value support.”

Woolworths is fair value, judged Kaupthing after the retailer reported improved first-half losses. The broker admitted Woolies is “not for the faint-hearted” but, despite worries about debt and seasonality of trading, there were reasons to be encouraged.

Buy Topps Tiles, recommended Numis. Topps’ pre-close update revealed like-for-like growth of 4.6 per cent and a total sales advance of 15 per cent over 52 weeks.

The springs are creaking at sofas specialist ScS, where preliminary profits plunged in what chairman Mike Browne called “the extremely difficult trading environment”. Panmure Gordon, urging sell, said: “Good company, bad market.” The news was better from ScS’s deadly rival Land of Leather, which managed an 18 per cent profits rise. Buy, recommended Kaupthing.

One-off and exceptional charges made electricals group Kesa’s interims hard to read, said Pali International. The broker maintained its buy advice on Kesa and rival DSGi, which it likes for their “cash generation, exposure to the technology cycle and break-up potential”.

Hold Liberty, the AIM-listed department store business, said Seymour Pierce. Interim losses were in line with expectations, but the broker observed: “The business has moved along its journey to re-establishing itself as an international luxury brand, but it will take time and money.”