Tesco shares fell 9p to 207p yesterday, fuelling speculation of an industry downturn. Variable weather conditions and a strong marketing presence by rival J Sainsbury were blamed for erratic trading in the second quarter.

But Tesco, the UK's biggest supermarket operator assured analysts that consumer confidence remained unswayed.

The year started well enough with underlying sales growth between February and May recording an increase of 4.5 per cent.

But it is thought that these figures fell to under 3.5 per cent over the next three months.

Trading difficulties in countries such as Poland and the Czech Republic have been identified, but Tesco insists that its overseas operations are trading within expectations.

Full-year forecasts remain unchanged, with analysts predicting a rise in pre-tax profits from last year's £479 million to £540 million for the six months to August 10.

But a number of City analysts voiced concerns about industry conditions. Iain McDonald of Numis Securities said: 'Our overall view is that first-half progress has been pretty steady, but we are very nervous about the food retailing market over the coming year.'

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