FTSE closes at four-month low

The London market tumbled to its lowest close for four months today after heavyweight oil, banking and pharmaceutical stocks slid.

Fears over the economy and of a possible conflict with Iraq were again brought to the fore and by the close of trading the FTSE 100 Index was down 58.7 points at 3678.

A tumble on Wall Street also hurt the mood. The Dow Jones Industrial Average continued to fall on its opening today, following disappointing earnings from JP Morgan and Eastman Kodak, as well as increasing concerns about war with Iraq.

Tom Hougaard, trader at financial bookies City Index, said: “All the big Footsie stocks have been hammered today – the pharmaceuticals, banks and oil have all been hit.

“The glimmer of hope is that the tech-dominated Nasdaq is in positive territory – this diversion between technology and more traditional stocks usually means the worst is over.”

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

Lloyds TSB was off 14.5p at 395p, HBOS weakened 14.5p to 574.5p, Abbey National lost 4.5p to stand at 465.5p and Royal Bank of Scotland slid 8p at 1342p.

Insurers on the slide included Legal & General, off nearly 4% – or 3.5p to 77.75p – while Prudential slipped 10.5p to 367.5p and Norwich Union owner Aviva fell 13p to 384.5p.

And oil companies weighed on the index, with BP down 2%, off 9p at 379.75p while Shell was 8.5p lower at 366.5p.

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 down 0.5p to 118p while BT Group slipped 5p to 189p. In contrast, mmO2 rose 1.75p to 50p.

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 2.5p at 321.5p, while Tesco was off 1p at 186p.

Morrisons, which started the bidding war with its £2.9 billion offer, slipped 1.5p to 182.5p, while another candidate Sainsbury’s slid 7.75p to 237.25p.

Elsewhere, Carphone Warehouse gained 2% – up 1.25p to 64p – 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.

The biggest Footsie risers were mmO2 up 1.75p at 50p, Alliance UniChem up 14p at 446p, Pearson up 11p at 551p, Reed Elsevier up 9.5p at 481.5p and Boots up 7p at 540.5p.

Fallers were Schroders NV down 29.25p at 425p, Rexam down 20p at 368.25p, British Airways down 6p at 121.25p, Capita down 10.25p at 214.25p and Schroders down 22.25p at 467.75p.