The FTSE 100 Index drifted below the 5700 barrier yesterday on the back of high oil prices and a lukewarm reaction to a Christmas trading update from Tesco.

Fears of potential supply disruptions in Iran and Nigeria sent the cost of crude oil above 65 US dollars a barrel, while the City was disappointed that Tesco had failed to beat expectations over the festive period.

Even the sight of inflation falling back in line with the two per cent target of the Bank of England to strengthen the case for a cut in interest rates was not enough to prevent the Footsie from closing 41.2 points lower at 5699.

Tesco featured among the heaviest fallers despite achieving like-for-like sales growth of 5.7 per cent over Christmas and the New Year. The stock lost 5.75p to 312.25p as it also reported international sales growth had slowed from 23 per cent to 16.1 per cent.

It was tracked on the fallers board by rival Morrisons, which recently showed the early signs of recovery in its festive trading statement. Morrisons retreated two per cent, off 3.25p to 191.75p.

And clothing chain Next fell back 35p to 1649p as Deutsche Bank cut its rating on the stock to "hold'' from ''buy''.

Oil and gas explorer Cairn Energy could not progress, despite indicating that more oil may be in place at its key Indian fields than previously thought. Shares weakened 3p to 1970p.

Broadcasting group ITV slipped 1.25p to 111p after announcing the sale of its outside broadcasting business 021 Television for £4.5m.

Bid speculation in the banking sector ebbed away and led to Standard Chartered ending the session in third place among the losers - off 31p to 1370p.

Shares in the emerging markets bank had surged yesterday on reports that a host of US financial heavyweights were considering a takeover.

Outside the top flight, clothing retailer Blacks Leisure fell even though it had managed to restore like-for-like sales to positive territory over the festive period.

The stock slipped 2p to 495p after Blacks said the consumer environment was fragile and that it remained cautious about underlying demand.

Chocolate maker Thorntons lost three per cent - down 4.25p to 138p - as more details emerged of the firm's poor recent trading, putting a takeover proposal by its chairman back on the drawing board.

And set-top box maker Pace Micro lost six per cent, or 4p, to 57p as it reported half-year losses of £8.9m and warned short-term component shortages may impact on immediate expectations.

On a brighter note, JD Sports owner John David Group improved 0.5p to 247.5p after forecasting profits ahead of expectations. Demand for trendy trainers and designer tracksuits helped push up sales over the Christmas period.

The highest Footsie risers yesterday were PartyGaming, up 4.75p to 154p, BHP Billiton, rising 28.5p to 986.5p, Pearson, up 16.5p to 687p, and Xstrata, rising 35p to 1505p.

The heaviest fallers were BT Group, off 5.5p to 210.25p, Yell Group, down 13.25p to 536.5p, Standard Chartered, off 31p to 1370p, and Next, down 35p to 1649p.