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Tesco shares slump again on rights issue rumours

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Tesco shares have fallen as much as four per cent on reports it is considering a rights issue to shore up its balance sheet.

The stock dropped this morning after FTAlphaville reported the supermarket is considering a rights issue following a month in which it rushed in new management and admitted a £250m accounting error.

Analysts had suggested a rights issue was a possibility earlier this week, but today’s report sent the stock down further: after initially dropping to 170p a share, a fresh 11-year low, Tesco was down 2.2  per cent at 174.3p by early afternoon today.

The company’s shares have now fallen 49 per cent year-to-date, making it the worst performer on the FTSE 100. Yesterday major investor Warren Buffett told CNBC his investment in the firm had been “a huge mistake”.

Tesco’s woes belied a healthier FTSE 100, as the index recovered from its Thursday losses.

The FTSE 100 was up 0.9 per cent at 6,504 shortly after midday, following its 1.7 per cent loss yesterday – the worst one-day drop since January. The index remains down over 5 per cent from its early September peak of 6,905.

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