London investors react badly to Wall Street slide

The beleaguered London market had another tough session today as investors reacted to a slide on Wall Street last night.

By lunchtime the FTSE 100 Index was off 30.1 points at 4512.9, although it was faring better than its opening, when it slumped nearly 100 points.

Heavy losses on Wall Street last night hurt sentiment, where the Dow Jones was hit by a disappointing report from drugs group Wyeth about its hormone replacement drug, which hurt pharma stocks.

George Bush’s speech failed to lift the mood and US markets closed lower, although they are expected to open slightly ahead today.

Tom Hougaard, trader at City Index, said: ‘‘The markets are oversold enough to warrant a rally but who is brave enough to step up to the plate?

‘‘Nothing has really been able to stop the rot in the stock market and pinning hopes on the upcoming earnings season is probably being too optimistic.’’

The weakness in US drugs stocks hit pharmaceutical companies in the UK.

Heavyweight GlaxoSmithKline was off 24p at £13.16 and AstraZeneca was 113p lighter at £25.33.

Hilary Cook, director of investment strategy at Barclays Private Clients said: ‘‘The whole US pharmaceutical market was hit by the announcement, so the whole UK sector was hit as well. AstraZeneca and Glaxo are very vulnerable to US sentiment.’’

Oil group Shell also weighed on the market, down 15½p at 483½p. Shares were affected following a shake-up of the S&P 500 last night, which will see Royal Dutch leave the US index.

But among the risers was Abbey National, surging 5%, or 43p to 838p, on renewed speculation that National Australia Bank is contemplating a takeover.

Among those making corporate announcements today, airports operator BAA fell 7½p at 592½p after it blamed air traffic control disputes and the Jubilee holiday weekend for a dip in passenger numbers.

The company’s seven UK airports, including Heathrow and Gatwick, handled 11.6 million passengers in June, a drop of 1.4% on the same month last year.

However, some stocks were making headway.

Marks & Spencer rose 5½p at 368½p as the retailer said chairman Luc Vandevelde was to step down as chief executive.

The widely-expected move coincided with a first-quarter trading update showing a strong performance in clothing although some felt food sales were slightly disappointing.

But outside the FTSE 100, retailer Big Food Group lost a penny at 105p after its first-quarter trading update.

BFG said it did not expect sustainable growth across the group until its recently launched three-year overhaul was complete.