FTSE hopes to make up ground today

The London Stock Exchange was opening today, hoping to make up ground after the FTSE 100 Index fell to a six-year low.

Blue-chip shares took a pounding yesterday as the fraught economic and corporate climate sent stocks plummeting.

Just five stocks made progress during the latest bleak session as the battered Footsie fell 3% or 120.7 points to 3739.4.

That pushed the top flight index past the six-year closing low of 3777.1 seen in July and left the market at its weakest since August 1, 1996.

Exchanges around the world shared London’s pain as investors took fright at the likely impact of rising oil prices on corporate performances.

As expected, New York traders experienced another grim session as the Dow Jones Industrial Average fell further from the 8,000 barrier.

A number of downbeat earnings updates put a dampener on the start to the week, with fibre-optic giant JDS Uniphase among those reviewing forecasts.

Many US traders are now holding out for a cut in interest rates from the Federal Reserve but London-based Martin Dobson of NatWest Stockbrokers said the mood on both sides of the Atlantic remained bleak.

He added: “People are wanting to stay on the sidelines. There’s no confidence in the markets.”

In London, banking stocks provided the largest downward pull for the FTSE 100 amid fears that higher bad debt provisions will dent results.

Investment bank JP Morgan added to the gloom in the sector by cutting its estimates for 2002 and 2003 because of the tough conditions.

Barclays fell almost 8% as a result, while Lloyds TSB eased more than 6%, HBOS tumbled nearly 5% and Abbey National slumped 6%.

Insurers were also adrift as investors continued to worry over the sector’s liquidity in volatile stock markets. As a result, Royal & Sun Alliance lost 7%, Prudential shed 8% and Aviva was down 5%.

Frontline retailers suffered after US giant Wal-Mart revised sales to the lower end of its expectations. Tesco and Sainsbury both slid 6%.

And the increased price of oil had a bearing on a range of stocks as crude hit 12-month highs in London amid worries about a possible war in Iraq.

Baghdad’s plans to reject any new UN resolution and news from the White House that the Pentagon had submitted a set of detailed military options for action against Iraq fuelled the jittery mood.

Among those affected by the prospect of higher oil prices was British Airways, down 8% at 103p on its first day outside the FTSE 100 Index.

But there was one bright note for investors after battered British Energy surged almost 80% – up 7.45p to 16.95p – amid speculation that the British government will extend a loan due to lapse on Friday.