Telecoms and banks drag FTSE down

The London market was set for a depressing end to the week today as the FTSE 100 Index was dragged lower by falls in telecoms and banking stocks.

By lunchtime the Footsie was down 28.1 points at 3853.7, after spending the whole morning in negative territory.

Banks and insurers were among those on the back foot, while telecoms were also sliding lower in a depressing end to the week.

Forecasts of further falls on Wall Street later today also hit the mood. US exchanges ended lower yesterday on increased concern about war with Iraq.

Martin Dobson, head trader at NatWest Stockbrokers, said: “It’s a disappointing day and it hasn’t been a pleasant week all-round.

“Wall Street was off last night on the back of Iraq and the weak retail outlook means bad debt is seen as the next big thing.”

Among the financial stocks, Abbey National fell more than 2%, down 11p at 489p while Royal Bank of Scotland fell 21p to 1421p and HSBC dropped 5.5p to 694.5p.

Insurers on the back foot included Friends Provident, off 2.25p at 105.25p, Legal & General down 0.75p to 88.25p and Prudential eased 6.25p to 404.25p.

Elsewhere, chemists came under pressure after the Office of Fair Trading recommended a relaxation of rules governing the pharmacy industry.

Boots initially dropped more than 4% before fighting back to stand down 3.5p at 543.5p but Alliance Unichem fell 6.25p to 449.75p.

Telecoms were also weaker amid fears of falling revenues – a report today said the cost of making mobile phone calls across rival networks was set to fall by nearly half over the next three years.

MmO2 was off 2.25p at 48.25p, Vodafone was 3.25p weaker at 120.25p and BT Group slipped 4.5p to 195.5p.

Not even the emergence of a fourth bidder – US buyout group Kohlberg Kravis Roberts – for Safeway could add any spark to proceedings.

Safeway dropped 4.75p below yesterday’s eight-month high, down to 302.25p, as analysts predicted any successful bid may still be months away.

But Morrisons was up 2.75p to 180.75p, while rival bidder Sainsbury’s rose 5p to 244.5p. Tesco nudged up 2.5p at 185.5p.

B&Q-to-Comet group Kingfisher also bucked the trend, rising 3% – 5p to 203p - after taking a major step forward in its restructuring today by agreeing to offload its German electricals chain ProMarkt.

The group is handing the loss-making operation back to its former owners for just one euro (66p) and the deal was widely welcomed in the City, where analysts believed Kingfisher may have had to

pay more to break free from the chain.