Following share price rises in recent weeks, retail stocks went into reverse and food groups were hit most heavily.

The latest TNS data showed that Morrisons is growing at twice the rate of the food market, hitting Tesco and Sainsbury’s valuations. JP Morgan said: “Although Tesco’s slowdown is not driven by a loss of price competitiveness, we believe it will use price to recover its traction. This would be bad news for the whole sector, which underpins our recommendation to have no net exposure to UK food retailers.”

Seymour Pierce reiterated its underweight advice on general retailers. Analyst Andy Wade said: “We believe that trading has continued to slow, particularly at fashion retailers, with footfall down and even those that do shop spending less.”

Gossip about a possible bid for Carphone Warehouse by US retailer Best Buy resurfaced, but Evolution was sceptical. The broker noted: “Best Buy has a 3 per cent holding, which, in our view, is only strategic.” Evolution moved Carphone from its add list to reduce, concerned that profit growth will slow.

Opinion was divided on fashion group Next. Goldman Sachs added the retailer to its conviction buy list and increased its price target from 1,517p to 1,740p. But Panmure Gordon switched from buy to sell, bringing its target back from 2,150p to 1,300p on the grounds that Next has not yet got its offer right.

After pulling off a£385 million refinancing last week, directors of variety store group Woolworths went on a share buying spree, demonstrating their conviction that the company has a future. Chief executive Trevor Bish-Jones led the charge, acquiring 150,000 shares at 11.5p each.

New Kingfisher chief executive Ian Cheshire could earn as much as£16 million if he manages to revive the flagship B&Q DIY giant. Cheshire would need to add£3.5 billion of shareholder value to Kingfisher over the next four years to hit the full bonus jackpot.

WHSmith’s Christmas trading update revealed group sales growth of 1 per cent, a 2 per cent like-for-like decline and a£90 million return of capital to investors. Shore Capital reiterated hold and said: “WHSmith should be valued on its cash-generative prospects, with an eye on future trading risks, which suggests the stock is now at fair value.”

Alexon sold its Envy menswear chain to entrepreneur John Kinnaird for£1. Broker Kaupthing said Alexon’s valuation was “outrageously low” and that the deal enhanced the quality and quantity of earnings.