Wall Street slows FTSE fall

The London market was dragged lower today by hefty falls from steel group Corus and telecoms firm Cable & Wireless.

By the close of trading the FTSE 100 Index was down 55.6 points at 4029.4 after the two stocks slumped following dismal trading updates.

However, a turnaround on Wall Street in afternoon dealing helped pull the top flight up from the session low of 3986.9.

US exchanges reversed an initial slide after it emerged Iraq had accepted the UN resolution that will return weapons inspectors to the country after nearly four years.

In the City, however, Cable & Wireless was the biggest faller, sliding a hefty 36% after the group unveiled a £800 million bill for a restructuring plan which will cost 3,500 jobs worldwide.

A hefty write down also ensured interim losses reached £4.43 billion and there was little in the way of positive news.

That meant shares, which at the height of the tech boom hit 1400p, slid 47.25p to 83p.

Corus was also under pressure – losing nearly a third of its value – after announcing it had ditched plans for a £3 billion merger with Brazilian steel firm CSN.

But analysts were more concerned by Corus’s forecast that the poor economic climate was likely to leave operating results in the second half weaker than expected. Shares fell 12.75p to 34p.

Banks were also among those weighing on the market, with Barclays down 15.5p at 428p, Lloyds TSB off 10p at 530p, Royal Bank of Scotland falling 38p to 1489p, HBOS easing 6.5p at 708.5p and HSBC off a penny at 707p.

And insurers were continuing their losing streak, with Aviva off 12p at 488p, Royal & Sun Alliance down 6.75p at 116p and Prudential behind 15p at 425p.

In the poor day’s trading, just a handful of stocks made it into positive territory.

Medical supplies group Smith & Nephew added 9p at 365p while among the pharmaceuticals, GlaxoSmithKline put on 7p at 1257p and Shire gained 8p at 504p.

And despite Cable & Wireless’ woes, a number of telecoms stocks were managing to edge ahead. Vodafone closed up 0.5p at 111.5p while BT rose 1.5p to 203.25p.

But smaller stocks also endured a tough session.

Furniture retailer MFI reported a slowing in recent strong sales growth and fell 7p to 135p, a 5% slide.

And Somerfield dropped 4.25p to 64.5p after the supermarket chain posted like-for-like sales growth of just 0.8% in the first half, below figures announced by rivals.

The group also said today the managing director of its struggling Kwik Save outfit was stepping down and will resign from the board.

The biggest blue-chip risers were Smith & Nephew, up 9p at 365p, Shire Pharmaceuticals, up 8p at 504p, GUS, up 6p at 594p and Granada, up 0.75p at 76.4p.

The heaviest fallers were Cable & Wireless, down 47.25p at 83p, Corus, down 12.75p at 34p, Centrica, down 11.25p at 165.75p and BAE Systems, down 10.5p at 163p.