Footsie hits fresh three-month lows

Banking and oil stocks conspired to pull the London market lower today, dragging the FTSE 100 Index to fresh three-month lows.

After a promising opening and rapid 36 point gain, the Footsie fell 41.9 points to stand at 3736.7 by the close of trading.

Poor trading on Wall Street also hurt the mood – the Dow Jones Industrial Average initially opened ahead but turned tail as investors cautiously awaited a stream of results and corporate outlooks.

In London, gains by life insurers and banks petered out and dealers said there was little to encourage money into the market.

Simon Buckingham, head of UK dealing at Gerrard, said: “It’s been horrible. We have had a fall today after a big turnaround in the US.”

Life insurers were among those on the back foot after initially gaining on the back of solid new business figures for 2002 from Aviva.

The former CGNU group had surged 4% but fell back and was down 4%, or 17.5p at 397.5p by the close.

Elsewhere, Friends Provident was down 2.5p at 99.5p, Prudential was 7p lower at 378p and Legal & General eased 2.5p to 81.25p.

Banks were also pulling down the wider market and Barclays eased 1.5p to 347p, HBOS slipped 23.5p to 589p and Lloyds TSB fell 7.25p to 409.5p.

Tom Hougaard, chief market strategist at spread betting firm City Index, said: “It looks as if the big holders of financial stocks are reducing or selling out of their holdings before the banking announcements and earnings in February.”

Telecoms were doing their best to prop up the Footsie and mobile phone giant Vodafone benefited from a stockbroker upgrade to rise 1p to 118.5p while BT Group was 3p higher at 194p and former subsidiary mmO2 rose 0.5p to 48.25p.

And supermarket giant Safeway continued to benefit from takeover interest as the retailer rose another 8.75p to 324p.

But there was a muted reaction to strong pre-Christmas trading figures from high street health and beauty chain Boots.

Fears over margins offset the strongest third-quarter sales for over 10 years yet the shares rose 18p to 533.5.

Outside the Footsie, telecoms group Cable & Wireless was up 4% after announcing the departure of boss Graham Wallace.

The group said the chief executive would step down once a replacement was found and its shares rose 2.25p to 64p.

However, chocolate maker and retailer Thorntons slumped 10% after sales dipped over Christmas and warning that interim profits would be at the lower end of market expectations. Shares were off 14p at 118p.

The biggest Footsie risers were Safeway up 8.75p at 324p, Shire Pharmaceutical up 8p at 358p, Bradford & Bingley up 4.25p at 270p, BT Group up 3p at 194p, and Kingfisher up 2.75p at 203.5p.

The fallers were ICI down 12p at 218p, Invensys down 2.5p at 53p, Aviva down 17.5p at 397.5p, Hays down 3.5p at 83p, and HBOS down 23.5p at 589p.