Expectations of another weak opening on Wall Street left share prices in London drifting today.
The FTSE 100 Index was down 17.5 points at 3669.7 at lunchtime today as investors waited for the New York market to open.
The biggest Footsie faller was engineering group Invensys as doubts persisted over its resilience to downturns following last week’s profits warning.
Shares lost almost 6%, falling 1p to 16.5p.
The troubled group saw more than £600 million wiped from its market value in one day last week.
On top of concerns over Iraq, traders in New York had earlier been unnerved by data showing the United States had a record trade deficit in 2002.
With the Dow Jones Industrial Average closing 85 points down yesterday, the Footsie immediately opened on the back foot.
Business was slow with only results from mortgage bank Alliance & Leicester generating much interest in the Footsie.
A&L shares initially rose after it reported an 18% jump in full-year profits but were later 26p lower at 754p as investors digested the company’s cautious outlook as it warned of the “potential dangers of the economic climate”.
Elsewhere in the blue-chip index, BAE Systems slipped back for a second successive session – falling another 5p to 121.25p – following the company’s annual results announcement yesterday.
On a positive note, tobacco group Gallaher topped the Footsie risers board as rumours continued to circulate in the City about a possible bid from rival British American Tobacco.
Gallaher rose 5% – up 31.5p to 628.5p – while BAT gained 12p to 596p and Imperial Tobacco lifted 36p to 980p.
The only other notable results of the session came from transport group Go-Ahead, which cheered investors by raising its dividend 40% to 7p a share.
The FTSE 250 Index bus and rail operator said the move reflected its “excellent prospects” after seeing interim profits surge 56% on the back of its new South Central franchise.
Go-Ahead shares rose almost 4%, up 21.5p to 607.5p, while rival transport operators also benefited with National Express up 16.75p at 386p and Arriva 3.25p stronger at 272.25p.
Pubs group Eldridge Pope saw its shares dive 13% after a profits warning.
The company, which has 174 managed and tenanted pubs in the south of England, saw its shares fall 18p to 118.5p as it said it remained pessimistic about the prospect of an immediate trading upturn.