Job losses and dire forecasts hit Footsie

The Footsie index of 100 leading stocks is down 76.1 points at mid-morning to stand at 5039.9, pulling back from an earlier 112-point slump.

Further news has emerged about the weakening economy, as aero-engine group Rolls-Royce announced 5,000 job losses and warned of difficult market conditions for the next two years.

Shares in the firm, which slipped yesterday amid rumours of job cuts, are up 1p at 135¾p.

British Airways is off 5½p at 140p; and aerospace and defence group BAE Systems is down 3½p to 324p as the market digests Boeing's announcement that it will have to reduce aircraft output due to a drop in demand.

Falling oil prices mean BP's share price is down 4% or 24½p at 544½p; Shell is off 19½p at 504½p; and Enterprise Oil is 30½p lower at 485p.

Banks are also slipping, with HSBC off 20p at 733p; Barclays 52p lower at £20.23; Royal Bank of Scotland off 31p at £16.47; and HBoS 5½p lighter at 783½p.

Bioglan Pharma's share price is down 75% or 57¾p at 18¾p after the collapse of its planned £527m acquisition of Bristol-Myers Squibb's skincare division, and news that it's to cut more than 100 jobs.

Food group S Daniels is down 31% or 3¾p to 8¼p after warning it had been hit by a slump in orders to hotels, airlines and airports, and saying the outlook for the rest of this year was 'uncertain'.

Recruitment specialist Robert Walters is off 12% or 12p at 86½p after warning its full-year profits would be hit by the downturn in business since the US terror attacks.

And software firm Flomerics is down 20% or 25p at 97½p after it announced it would be cutting jobs as it reacted to the weak global economic conditions - which would hit full-year profits.