By Carla Mozee, MarketWatch

LONDON (MarketWatch)--Tesco PLC shares were among the hardest hit in London trade on Monday, weighing on the FTSE 100 index, following a report that a major shareholder cut his stake in the supermarket chain.

The FTSE 100 was down 0.1% at 6,813.92. The index finished last week with a 0.7% gain.

Tesco was a drag on the benchmark, with shares down 1.7% after the chief executive of Harris Associates said the U.S. investment fund cut its stake in Tesco to about 1%, from 3%. Harris's CEO David Herro told the Sunday Telegraph that Tesco, the U.K.'s largest supermarket chain, is facing many unknown risk factors that "are just too high to justify" carrying a large position. Herro also said he wants to hear a clear strategy from Tesco's new chief executive on how he'll improve the business, which is locked in steeped competition from its rivals.

Tesco's new chief executive, Dave Lewis, was expected to begin work on Monday, a month earlier than had been planned. On Friday, Tesco shares dropped 6.6% after Tesco cut its full-year trading outlook below analysts' expectations of 2.7 billion pounds ($4.49 billion) to GBP2.8 billion. It was the company's third profit warning in three years. Tesco also cut its interim dividend.

In the retail space Monday, shares of Wm Morrison Supermarkets sank 3.1%, J. Sainsbury PLC declined 1.3% but Marks & Spencer Group pushed 1.7% higher.

Elsewhere, shares of Barclays were down 0.3%. They had been up earlier Monday after Spain's Caixabank SA on Sunday said it's agreed to buy Barclays retail-banking business in Spain for about 800 million euros ($1.05 billion). The final price will be dependent upon the division's total assets at the end of the year. Barclays said Sunday its Spanish units had EUR22.2 billion in assets and EUR20.5 billion in liabilities as of June 30. The move scales back the British bank's presence in a less-profitable market.

The U.K. equity market was down alongside European markets, which turned lower after Russia's foreign minister said Moscow will defend the country's economy if it comes up against a fresh round of Ukraine-related sanctions.

Data: "Russia's escalation of the conflict in Ukraine has taken a toll on the internationally exposed manufacturing sector, and that effect could yet worsen further in the coming months, given recent confidence drops in the more directly exposed core European economies," said Robert Wood, chief U.K. economist at Berenberg, in note about a slowdown in the U.K. manufacturing sector. Data from Markit/CIPS released Monday showed the sector expanded at the slowest pace in 14 months in August.

Separately, the Bank of England said Monday mortgage approvals in the U.K. fell in July to 66,569, which was less than the consensus estimate of a fall of 66,000. Net lending in July rose to GBP3.4 billion in July, the highest level of consumer lending since mid-2008.

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