Early gains lost as blue chip shares drift

THE London market was unable to hold onto early gains yesterday as it slipped back into the red.

The FTSE 100 Index had climbed throughout the day as a range of sectors gained ground.

But traders had warned that light volumes and a lack of corporate news meant conditions were far from stable.

As the session wore on, blue-chip shares began to drift and the FTSE 100 Index closed down 4.1 points at 4364.8.

A mixed start on Wall Street added to the subdued mood.

The tech-heavy Nasdaq was ahead by London's close but the Dow Jones Industrial Average had dipped into negative territory, despite initially charging forward.

In London, ITV broadcaster Granada ended a recent upbeat run to lose 2p at 86p.

The group had moved ahead on plans to forge closer ties with rival Carlton but today's 3% drop saw it top the FTSE 100 fallers' board.

Advertising and media group WPP was another loser, falling 7p fall to 460p.

Oil giants BP and Shell also moved back, off 4p at 521p and 1p at 441p respectively, as the price of oil eased.

Telecoms had been one of the strongest sectors earlier in the session, but stocks were mixed by the market's close.

BT was down 3p at 213p and mobile phone giant Vodafone dipped p to 106p. But rival mmO2 added 1p at 48p and Cable & Wireless was 7p stronger at 164p. Among the risers, British Airways gained nearly 4% or 5p at 155p after strong figures from affiliate Qantas.

The Australian airline further boosted sentiment after saying international operations had picked up strongly in the second half year.

Upbeat figures from German operator Lufthansa also helped the mood. The group today narrowed its first-half losses and boosted its profits outlook.

A number of heavyweight banks added their support and helped stop the market falling further. Barclays was 6p ahead at 474p, Lloyds TSB was up 3p at 595p and Royal Bank of Scotland was 15p stronger at £16.30.

Of the smaller stocks, temporary power supplier Aggreko surged 22p to 157p as a 4% fall in pre-tax profits to £25.6 million came in ahead of expectations.

The 16% share rise was despite forecasts from chief executive Philip Harrower that tough conditions in its North American market would continue this year.

But Orchestream plunged 1p to 2p, a 31% dive, after the software group said half-year revenues had slumped and losses had widened.

And semiconductor group IQE tumbled 39% or 9p to 15p after interim losses spiralled to £58.1 million from £5.9 million and it warned recovery in the sector would take longer than expected.

Back in the FTSE 100, The biggest risers were Royal & Sun Alliance, up 12p at 118p, Invensys, up 5p at 74p, Cable & Wireless, up 7p at 164p and Sage, up 6p at 141p.

The heaviest fallers were Granada, down 2p at 86p, Amersham, down 17p at 572p, Johnson Matthey, down 27p at 935p and P&O Princess, down 11p at 408p.