Britain's retail sector shifts into focus amid fears that wet weather and five interest rate hikes in the past year have taken their toll on consumer spending, analysts said. The FTSE 100 index of leading shares finished at 6,690.10 points on Friday, up 82.2 points or 1.24 percent from a week earlier.
Next Tuesday, investors will look to a trading update from high-street heavyweight Marks and Spencer, as well as June retail sales figures from industry body the British Retail Consortium.
The Bank of England on Thursday raised its key interest rate by a quarter-point to 5.75 percent - the highest level for more than six years, in a bid to dampen British inflation. The BoE's move to hike the cost of borrowing for the fifth time since August 2006 was widely anticipated by economists.
But retail sector analysts are worried that the raft of rate hikes - which have ramped up the cost of mortgage and other loan repayments - have significantly cut consumer spending.
Added to the picture, fashion retailers are expected to suffer from Britain's bout of non-seasonal bad weather in recent months.
"The retailers have been saying for some time now that they are very cautious about the consumer environment and they are fully expecting the interest rate rises to wash through," said Richard Hunter, equities analyst at Hargreaves Lansdown.
"Without question, interest rates will be mentioned by probably both Marks and Spencer and the BRC, and yes, it was an incredibly wet May and June. "It's not a question of people not going out to the shops in the bad weather, as much as the fact that the shops have got the wrong stock, given the weather that we are having."
However, Marks and Spencer was fully expected by the market to weather any potential consumer downturn. "Marks and Spencer is into full recovery mode now, and remains fairly well regarded by the market," Hunter added.
"But when you get the complete darling of the sector - Tesco - coming out with anything other than stellar comments, which is what happened a couple of weeks ago, then that could be a sign that the market is turning slightly."
Tesco, Britain's biggest retailer, had last month reported a slight slowdown in sales growth for its first financial quarter. Elsewhere next week, attention will turn to a second nation-wide postal strike which is due on Thursday.
British postal staff will stage another 24-hour national strike, after a similar stoppage last month, in a row over pay and the scrapping of thousands of jobs, union bosses said.
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