US losses impact heavily on London markets

The FTSE-100 Index went into freefall as markets in London reacted badly to heavy losses across the Atlantic.

By the close, the Footsie was down 85.9 points at 5,917.3, having lost most of the gains achieved earlier in the week.

Stocks had been under pressure throughout the day after a profit warning from US chipmaker Intel.

But that was exacerbated by a poor opening in the US, where hopes of further interest rate cuts were dented by stronger-than-expected employment figures.

The Dow Jones Industrial Average fell more than 200 points in early trading, while the tech-dominated Nasdaq was also off 100 points.

Inevitably, new economy stocks led the UK market lower, with chip designer Arm feeling the heat from Intel's warning. Arm fell more than 10%, or 37½p, to 331½p while fibre optic maker Bookham Technologies, a FTSE-250 company, slipped 49p at 444p.

Other casualties included software company Autonomy, down 45p at £13.09, Logica, off 113p at £14.40 and Dimension Data, down 6½p at 411½p.

Telecoms were also suffering, with Marconi down 29p at 481p, Cable & Wireless 51p lower at 701½p and Colt Telecom off 84p at £12.24.

The banks at the centre of the Abbey National takeover battle were also in the spotlight following yesterday's Office of Fair Trading report into Lloyds TSB's proposed bid.

Lloyds was down 14½p at 645p and Abbey off 51p at £10.90 after analysts indicated the report made gloomy reading for those backing the deal.