War talk intitiates 103-point slump in London market

Investors were rattled by further uncertainty over Iraq today as London shares slumped more than 100 points during another depressing session.

The latest sell-off affected a range of sectors, including insurers, banks and oil stocks, as the Footsie stood 103.4 points lower at 3349.3 by mid-morning.

Analysts said the picture over a possible Iraqi conflict remained unclear, particularly after US defence secretary Donald Rumsfeld said the US could launch a war without UK troops.

That further spooked investors after five declines in the last six sessions.

With US markets also expected to open lower later today, there were just eight stocks in positive territory today.

Battered insurance stocks all struggled after a resilient first hour with Prudential down 14.25p at 290p, Royal & Sun Alliance 2.25p lower at 59.75p and Norwich Union owner Aviva off 17.75p at 348.25p.

Among the banks HBOS fell almost 7%, or 42.5p at 570p, while Abbey National slipped 14p to 325.5p and Barclays shed 14.25p to 315p.

Heavyweight energy stocks also had a major downward pull after a fall in the price of oil. Shell eased 11.5p to 342.75p while BP eased 17.25p to 378p.

But the session’s biggest Footsie fall was reserved for property group Canary Wharf amid fears of rising vacancy rates in its London office portfolio.

Shares slumped 26%, or 61p to 170p, after interim profits also showed a sharp fall because of higher interest charges.

Outside the Footsie, steel group Corus recovered some ground after the heavy fall seen yesterday following its update that its Dutch supervisory had blocked the sale of two aluminium businesses.

Today shares rose 21% or 1.03p to 6.03p.

Former blue-chip telecoms equipment company Spirent also rose 18%, or 2.25p to 14.75p, after it said cost-cutting measures had stabilised the business after a profits warning in October.