FTSE heading for fresh low

The FTSE 100 Index was heading for fresh lows today as retail and financial stocks fell heavily during a gloomy session.

By lunchtime the blue-chip index had recovered from an earlier 190-point low but was still skidding towards the 3700 mark, down 114.3 points at 3743.7.

The last time the FTSE 100 closed below 3700 was July 30 1996, when it reached 3668.5.

Forecasts for a negative opening on the New York markets later this afternoon were adding to the gloomy sentiment.

Last night Wall Street slumped after financial giants JP Morgan and Citigroup’s shares fell as the pair’s links to Enron were questioned. A spate of disappointing corporate updates further hit sentiment.

In London today, a string of high street names littered the Footsie fallers board.

Argos group GUS was one of the biggest victims after a first-quarter trading update confirmed that consumer spending had moderated.

It still posted respectable underlying sales of 5% but investors were not impressed and the shares lost 29½p at 450½p.

Other general retailers falling back included B&Q-to-Comet group Kingfisher, off 15¾p at 164¼p, electrical specialist Dixons, down 9p at 146p and chemist Boots, 26½p weaker at 546½p.

Supermarket chain Sainsbury’s lost 16¼p at 293¾p after first-quarter sales came in below analyst forecasts.

Rival Tesco fell 4¼p to 193¼p and Safeway shed 6¾p at 223½p.

Among financial stocks heading south, Schroders NV lost 34½p at 408½p, Old Mutual shed 6p at 74½p and venture capitalist 3i slid 35½p to 500p.

Among the banks, Bradford & Bingley dropped 16½p at 285½p, Royal Bank of Scotland lost 79p at £13.96 and HSBC drifted 37p to 658p.

But despite the grim conditions, a handful of blue chips were edging ahead.

Insurer Prudential put on 4p at 424p after interim figures matched predictions.

Investors also breathed a sigh of relief over banking group Abbey National, 6½p better off at 663½p. The City was pleased Abbey’s bad debt provisions were no worse than expected and that it unveiled a 5% dividend rise.

Drugs giant GlaxoSmithKine was tentatively coming back from a morning of losses, up 21p at £10.78, as the City digested its second quarter figures.

It reported a 7% rise in profits over the last quarter, in what it described as a ‘‘challenging’’ period for the pharmaceuticals industry.

The group said pre-tax profits for the three months to June 30 rose to £1.83 billion while sales were up 6% at £5.4 billion.