LONDON: Shares in groceries-selling retailers, including Wal-Mart, tumbled on Friday after Amazon's announced it will acquire Whole Foods Market.
Amazon's deal to buy the upscale US grocery chain for $13.7 billion throttled the broader retail sector on concerns the online retail giant will create an even tougher environment for food sellers.
Wal-Mart slumped 5.5 percent, Target plunged 8.4 percent, Costco Wholesale fell 6.2 percent and Kroger 12.6 percent.
Shares in Amazon itself were up nearly 3.0 percent approaching midday in New York.
Analysts viewed the deal with Whole Foods as a seismic event for the sector.
"The retail sector is used to change, but every so often an event occurs that shakes the industry to its core," said Neil Saunders, managing director of research firm GlobalData Retail. "Amazon's acquisition of Whole Foods is one of those."
- 'Potentially terrifying' -
He said the deal swiftly allows Amazon to quickly build up its business in groceries through buying a well-regarded brand. But "for other grocers, the deal is potentially terrifying."
Investors are now sizing up "the possibility of Amazon doing to them what it has done to booksellers", said Chris Beauchamp, chief market analyst at trading firm IG.
"Amazon does not so much park its tanks on a sector's lawn as crash them through the store frontage," he said.
In London, shares in Tesco finished the day down 4.9 percent.
Shares in Britain's largest retailer had earlier enjoyed solid gains as the firm had reported a 3.6 percent increase in sales worldwide. Even in Britain, where the market is facing headwinds from Brexit, sales grew by 1.6 percent.
"Tesco shares managed a spectacular 180 degree change in fortunes on Friday," said market analyst Jasper Lawler at London Capital Group.
"Investors flipped from satisfaction at the highest profits in seven years to fears that Amazon could knock Tesco off its perch as Britain's number one supermarket."
Amazon has a partnership with another British supermarket chain, Morrisons.
The plight of the retailers helped drag down the wider markets in the United States, with the three main Wall Street equities indices down nearing midday.
- Europe rebounds -
However, European stock markets rebounded overall from a sell-off the previous day, while the pound extended gains on growing expectations of hikes in British interest rates.
But they shifted back into buying mode in Europe on Friday, with Frankfurt, London and Paris pushing higher ahead of the weekend.
European investor sentiment was also buoyed after eurozone ministers struck a long-delayed deal with Greece on Thursday to unlock badly-needed rescue cash.
Meanwhile, Tokyo was also boosted by a slumping yen, which makes its exports cheaper for foreign customers.
With the yen weakening after the Bank of Japan refused to alter its accommodative monetary policy, stocks rallied and Tokyo's Nikkei index closed up 0.6 percent.
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