Banks and oil stocks lower Footsie

Falls in banking and oil stocks dragged the London market still lower today, as investors continued to express concern at the uncertain outlook for the economy.

Fears over a possible conflict with Iraq were once more to the fore and by lunchtime the FTSE 100 Index had fallen 60.8 points to 3675.9.

A tumble on Wall Street last night also hurt the mood. The Dow Jones Industrial Average fell nearly 150 points as US investors sifted through a slew of profits reports from firms including banking giant Citigroup, which reported a fall in profits.

Even hopes the Dow will rise on its opening today failed to liven the London market.

Among the sectors, banks and insurers were again feeling the pressure from the poor economic outlook.

Lloyds TSB was off 18.5p at 391p, HBOS weakened 19p to 570p, Abbey National lost 17.5p to stand at 452.5p and Barclays was a penny lighter at 346p.

Insurers on the slide included Legal & General, off nearly 3% – or 2.25p to 79p – while Prudential slipped 20p to 358p and Norwich Union owner Aviva fell 13.5p to 384p.

And oil companies weighed on the index as the price of crude fell back, with BP down 3%, off 12.75p at 376p while Shell was 12.75p lower at 362.25p.

On a brighter note, telecoms stocks were holding firm despite a damning report from the Competition Commission which demanded the UK’s big four mobile phone firms cut their charges.

The Commission found that consumers were paying too much for calling mobiles from rival networks and landlines.

But the findings had been widely forecast in the City and Vodafone edged up 0.25p to 118.75p, mmO2 rose 2p to 50.25p although BT Group slipped 3p to 191p.

The other major news again concerned supermarket group Safeway after the UK’s biggest grocery chain Tesco threw its hat into the takeover ring.

The possible offer – the sixth that Safeway has attracted – got a lukewarm reception and Safeway was down 8p at 316p, while Tesco was off 1.5p at 185.5p.

Morrisons, which started the bidding war with its £2.9 billion offer, rose a penny to 185p, although another candidate Sainsbury’s slipped 1p to 244p.

Elsewhere, Carphone Warehouse gained 5% – up 2.75p to 65.5p – after reporting a strong Christmas and healthy start to the year.

And shares in supermarket chain Somerfield jumped 20% – up 13p to 78p – after half-year results showed profits and sales continuing to improve.