City gloom despite Bank of Ireland move on Abbey

ABBEY NATIONAL failed to lift the cloud hanging over the City yesterday, despite gaining nearly 6% after it emerged that Bank of Ireland had made an informal merger approach.

Shares in the former building society rose 30p to 535.5p as investors speculated on the merits of a tie.

Nevertheless, continued gloom over the health of the global economy and concern about tension in the Middle East pushed the FTSE 100 Index back below the 3800 barrier in a subdued start to the week.

Telecoms and drugs stocks were among the heavyweight fallers as investors in London took their lead from losses on Wall Street on Friday night. The Footsie was down 80.4 points early on before a slight rally on the back of a positive start to US trading yesterday saw the blue-chip index close down 32.9 points at 3780.9.

Investors' nerves were heightened by news of the explosion on a French tanker in Yemen and many moved to the sidelines ahead of George W Bush’s statement on Iraq in the US last night.

Among the fallers, Vodafone dropped 4%, down 3.75p to 86.25p, after figures showed that customer growth was slowing its Japanese subsidiary J-Phone.

In the FTSE 100, high risers were Capita, up 20p at 186.75p, Gallaher, up 38.5p at 665p, Abbey National, up 30p at 535.5p and Legal & General, up 4.75p at 96p.

The heaviest fallers were BT, down 8.75p at 154p, Reuters, off 11p at 199p, BAT, down 32p at 636p and Cable & Wireless, down 6p at 121p.