By Sudip Kar-Gupta
LONDON (Reuters) - The FTSE 100 fell to one-month lows on Tuesday as another profit warning from supermarket retailer Tesco (L:TSCO) hit the market.
Shares in Tesco at one stage dipped as much as 17 percent, their lowest level in around 14 years and wiping around 2.6 billion pounds off Tesco's market capitalisation.
Tesco cut profit expectations for the fourth time this year, blaming the cost of trying to recover from an accounting scandal and a slide in market share.
Tesco's shares tumbled 10.3 percent, and its woes also dragged down rivals such as WM Morrison (L:MRW), which retreated by 4.4 percent, while Sainsbury (L:SBRY) declined 3.4 percent.
"It would be appear to be more of the same for Tesco. We all know that pricing pressure on retailers is intense, in particular on clothing retailers and supermarkets," said Edmund Shing, global equity portfolio manager at BCS Asset Management.
"What we need to remember is that any far-reaching restructuring of a former high-flyer like Tesco takes time, as we saw before with Carrefour (PA:CARR) in France, and requires significant management time and investment.
"However, this may be the last 'big bath' provisioning and resetting of forecasts by the new CEO so that Tesco can relaunch on a sensible footing," added Shing.
Tesco took the most points off the blue-chip FTSE 100 index (FTSE), which was down by 1 percent at 6,605.13 points by the middle of the trading session - hovering near its lowest level in around a month.
Compounding the gloom in the retail sector, online fashion retailer ASOS (L:ASOS) fell 6.1 percent as it posted a further slowdown in quarterly sales growth.
A new slump in mining and energy shares also weighed on the market. Energy stocks fell as the price of benchmark Brent crude oil hovered near five-year lows on worries of a swelling supply glut as Gulf producers appeared ready to ride out plunging prices.
Shanghai aluminium also dropped to its lowest level since May as growing overcapacity and a shaky outlook for demand in China curbed buying. Three-month copper on the London Metal Exchange
Nevertheless, Charles Hanover Investments' partner Dafydd Davies expected the FTSE 100 to rally back up to 6,800 points by the end of 2014, arguing that plans by central bankers to stimulate global economic growth would still support equities.
(Additional reporting by Francesco Canepa; Editing by Mark Heinrich)