Marks & Spencer spearheaded an advance by retail shares on Tuesday, when its fourth-quarter numbers defied downbeat expectations.

The retail sector rose 6 per cent on the day, when there was also the successful refinancing of Clinton Cards and placings of Debenhams and Sainsbury’s shares. Improving sentiment towards retailers helped the FTSE 100 make its second-biggest gain of the year on Tuesday.

Panmure Gordon analyst Philip Dorgan believes retail will rise further. He said: “The sector has been a strong performer, in particular since December, but we would not be tempted to take profits and remain buyers.

“When the recession ends we expect that capacity will have been reduced and the survivors will do very well, even if consumers’ access to cheap credit is much diminished.”

One analyst unconvinced by M&S’s performance was Credit Suisse’s Tony Shiret, who questioned the extent to which the update showed things are getting better. He said: “Our core view remains that long-term positioning deficiencies have not been addressed and pose a financial risk to market-led recovery.”

However Citi, advising hold, said improving like-for-like trends and unchanged gross margin guidance should improve earnings visibility and “start the process of rebuilding investor confidence”.

Singer moved M&S from sell to fair value. The broker said that “an awful lot hangs on trading conditions over the next six weeks” but increased its target price by almost 15 per cent to 270p.

The Icelandic saga continued to unfold as Landsbanki and Kaupthing holdings in Debenhams and Sainsbury’s were placed at between 40p and 45p, and 310p respectively. The Debenhams shares were previously held by defunct investor Baugur and the Sainsbury’s stake by embattled tycoon Robert Tchenguiz.

Hold Clinton Cards, said house broker Numis after the retailer’s interims. Clinton extended its bank facilities until 2012 and re-scheduled payments, but the dividend was passed.

The latest TNS grocery data showed a slowdown in the four weeks to March 22 compared with the previous period, but broker Bernstein said the timing of Easter was partly responsible. Bernstein continues to favour Tesco, despite it “moderately” underperforming the market over the four weeks.

UBS retained its neutral stance on Next following the retailer’s prelims. The broker thought Next’s valuation fair “as there is more EBIT margin recovery potential elsewhere in the sector”.

Sports group JJB successfully offloaded its fitness clubs arm and associated stores to Dave Whelan for £83.4m and proposed a CVA affecting 140 closed shops and varying terms on the 250 that remain open.

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