Shares in DSG, formerly Dixons, fell 6 per cent after Europe's largest electricals retailer reported "very disappointing" sales in Italy and said annual profits growth would be flat.

Shares in the group, which had risen strongly ahead of an expected healthy performance, fell as low as 204.25p before recovering slightly to trade 4 per cent lower at 209.5p.

John Clare, the chief executive, said political uncertainty and a subdued economy in Italy reduced consumer confidence and drove like-for-like sales down 10 per cent.

He added that a recovery plan was in place, but group profits were likely to be unchanged from last year’s £97.5 million when half year results are unveiled in January, quashing market expectations of an improvement.

Mr Clare nevertheless stressed that he was confident of continuing growth.

"With the important Christmas peak season ahead of us, it is too early to extrapolate trends for the year as a whole. However, we are confident that we are well placed to deliver growth over this important time of the year," he said.

DSG's Italian woes took the shine off an otherwise confident set of results.

DSG said strong consumer demand for high definition televisions, MP3 players, digital cameras and satellite navigation equipment will drive retail sales growth at Christmas and beyond.

The owner of Britain's Dixons, PC World and Currys stores reported a 14 per cent jump in sales, with a 5 per cent rise in like-for like sales, in its half-year trading statement, beating some analyst’s expectations.

The group’s overall performance reflected continuing demand for flat panel TVs - sparked by this year’s World Cup which saw a 5 pct rise in sales in the first 16 weeks of the year.

Online-only specialist electrical retailer, Dixons.co.uk, grew sales by 190 per cent in the period, after it widened its products to include white goods, toys, fitness and games equipment. It plans to add DVDs, CDs and books in time for Christmas.

Currys stores, including Currys.digital, sold high definition TVs and laptops in high volume, after successfully introducing a multi-channel ‘’reserve and collect’’ service.

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