Footsie falls below 3800 mark

Falls in banking and oil stocks weighed on the London market today, keeping the FTSE 100 Index at three-month lows.

By the close of trading the Footsie was down 42 points at 3778.6, as dealers had a lacklustre start to the week.

A tumble on Wall Street on Friday, on increased concern about war with Iraq and sluggish outlooks from both Microsoft and IBM, weighed on the mood.

In addition, trading lacked direction today as US markets are closed for Martin Luther King Day.

Despite an early spurt, shares tumbled lower by the close of trading as banks and oil stocks took a battering.

Oil giant Shell slid 8p to 386p on a broker downgrade, while rival BP fell 8.5p to 395p.

Banks on the way down included Barclays off 11.25p at 348.5p, Abbey National down 8p to 470p, Lloyds TSB down 9p to 416.75p, Alliance & Leicester 19p lower at 731p and Bradford & Bingley off 7.5p to 265.75p.

Insurers also had a poor day, with Legal & General off 2.25p at 83.75p, Prudential down 11p at 385p, Royal & Sun Alliance 2.75p lighter at 114.25p and Friends Provident 2.25p cheaper at 102p.

Chocolate and fizzy drinks group Cadbury Schweppes was another faller, off 8.25p at 358p, after a downgrade from JP Morgan.

Even the bidding battle for Safeway failed to liven the market.

The battle for the supermarket chain hotted up yet again today with the emergence of a fifth potential bidder – billionaire Philip Green, who owns Bhs and Arcadia.

Shares surged 10.25p to 315.25p, or 4%, on hopes of a bid while shares of rival bidders Sainsbury’s and Morrisons also rose. Sainsbury’s was up 0.5p to 247.5p while Safeway’s original partner Morrisons gained 4.25p to 186.5p.

Other high street stores groups also gained as the market looked ahead to official retail sales figures later this week.

B&Q-to-Comet group Kingfisher rose 1.75p to 200.75p, Boots was up 10.5p at 551.5p and Next rose 12p to 787p.

But the rises were offset by falls in other sectors – including telecoms which lost their early gains to slide lower, adding to last week’s lethargy.

Mobile phone operators slid on Friday on concerns about Oftel’s review of termination charges and today former BT business mmO2 fell 0.25p to 47.75p, while Vodafone slipped 1.5p to 117.5p.

Among smaller stocks, furniture retailer MFI built up a 3% shares rise, up 3.25p to 101.5p, after reporting strong January trading.

But late-night bars group Luminar tumbled 15%, off 52.5p to 290p, after reporting disappointing sales figures over the Christmas period.

The company behind the chains Chicago Rock Cafe and Jumpin Jaks said a consumer spending downturn had affected the festive showing of its weaker sites.

The biggest Footsie risers were Safeway up 10.25p at 315.25p, Dixons up 2.75p at 115.25p, Morrisons up 4.75p at 186.5p, Boots up 10.5p at 551.5p and Next up 12p at 787p.

Fallers were BAE Systems down 7.75p at 117.5p, Capita down 10p at 223p, Royal Bank of Scotland down 47p at 1371p, Barclays down 11.25p at 348.5p and WPP down 13.75p at 440.25p.