LONDON (Reuters) - Britain's top share index posted its strongest monthly performance in almost a year in January, although a fall in BT (>> BT Group plc) pushed the market lower on Friday.
The blue-chip FTSE 100 <.FTSE> index closed down 0.9 percent at 6,749.40 points. The index nevertheless ended up by around 2.8 percent for the month of January -- its strongest monthly performance since February 2014.
Telecoms group BT dropped 2.6 percent after agreeing to pay down its ballooning pension deficit, and signing off on an upgrade of its fibre network.
Traders said the steps to put its finances in order ahead of a football rights auction and a deal to buy mobile network EE were needed, but would weigh on the stock in the short term.
"BT have a lot of bills coming their way, plus the next round of bidding for football services. Having made their bed with regards to providing a certain standard of service and coverage, they'll have to lie in it, and that won't be cheap," IG market analyst Alastair McCaig said.
The shares of major supermarket retailers, such as Sainsbury (>> J Sainsbury plc) and Morrison (>> WM Morrison Supermarkets PLC), also lost ground.
Traders attributed their fall to plans by the British government to give more powers to a watchdog to fine supermarkets if they fail to treat their suppliers fairly.
"In the midst of this supermarket war, with price cuts left, right and centre, this development throws a new spanner into the works," Spreadex analyst Connor Campbell said.
The FTSE 100 hit a peak last year of 6,904.86 points, which marked its highest level since early 2000, although it then lost ground towards the end of 2014.
Some traders were adopting a cautious stance, due partly to uncertainty over Greece, after the left-wing Syriza party won an election last weekend and vowed to oppose austerity measures imposed on the country by international creditors.
"I would look to sell out on any rallies," said Beaufort Securities sales trader Basil Petrides.
(Additional reporting by Alistair Smout; Editing by Alison Williams and Susan Fenton)
By Sudip Kar-Gupta
