Fresh data has heightened fears over the plight of the UK retail sector, with Office for National Statistics figures showing a bigger-than-expected fall in sales in March.
Sales fell 1.2% last month, a much bigger drop than the 0.5% investors had been expecting. In the three months to the end of March, sales were down 0.5%.
James Smith, economist at ING, said the news meant a second interest rate rise from the Bank of England this year, after May's expected hike, was now looking less likely.
'The latest month-on-month fall in retail sales rounds off what has been a dreadful quarter for UK retail,' he said.
'Admittedly, there's little doubt that the seemingly endless episodes of snow and bad weather in March will have played a major role.
'But we don't foresee real incomes rising significantly any time soon either. And partly for this reason, consumer confidence remains low, particularly when compared to Europe and the US, where shoppers are the most optimistic they've been for well over a decade.'
Debenhams (DEB) underlined the struggle for UK retailers as the clothing and furniture store halved its interim dividend to half a penny as it reported an 85% fall in first-half profits. The shares slumped below 21p at the open, before recovering ground to trade at 23.2p, flat on the day.
'Margins are totally shot to pieces,' said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
'The combination of low sterling increasing the cost of stock, and heavy discounting, means gross margins have tumbled.
'The Debenhams Redesigned strategy is seeing the group invest heavily to try and get itself back on an even footing, but that's driving debt upwards, and has ultimately cost investors over half the interim dividend.'
The FTSE 100 rose 17 points, or 0.2%, to 7,335, with WPP (WPP) leading the way, up 4.6% to £11.63, as a senior executive told the BBC many staff would fell 'liberated' by the departure of boss Martin Sorrell.
On the FTSE 250, Ultra Electronics (ULE) was a heavy faller, down 9.5% at £12.53 as the Serious Fraud Office opened an investigation into its conduct of business in Algeria.