War worries keep footsie down

Worries about the potential for a drawn out war in Iraq weighed heavily on the London market today as blue-chip shares took a pounding.

Worries about the potential for a drawn out war in Iraq weighed heavily on the London market today as blue-chip shares took a pounding.

The benchmark FTSE 100 Index fell 95.2 points to 3613.3 after following the lead of Asian markets which had dived overnight with a 4% fall for the Nikkei.

Asian declines were sparked by news of the spreading Severe Acute Respiratory Syndrome superbug which investors fear could derail fragile economic recovery in the region.

After the initial reaction to Asia, the Footsie failed to make much ground before a poor opening for the Dow Jones Industrial Average ensured a third day of falls in London.

The losses are just the latest retreat by London shares after rallying two weeks earlier on hopes of a brief conflict in the Gulf.

Just two Footsie companies managed to register a rise by the close of trading.

Supermarket retailer Safeway was up 2.75p at 260.75p while tobacco firm Gallaher rose 5.5p to 610p.

Insurers bore the brunt of today’s weak sentiment with Prudential off 24.5p at 308.5p, Norwich Union owner Aviva down 27.25p at 352p, Friends Provident off 4.5p at 76.25p and Legal & General 4.5p lower at 69.5p.

Banks on the slide included Barclays – off 9.5p at 365p, Royal Bank of Scotland 41p lower at 1425p and Abbey National down 16.5p at 329p.

And despite another rise in the price of oil, Shell fell 11.75p to 382.5p and BP slipped 12.5p to 401.25p.

Companies with most to lose from a lengthy Iraqi conflict were among the heaviest fallers, with cruise ship operator P&O Princess down 16.5p at 413.25p and FTSE 250 stock British Airways off 4.5p at 104p.

Fears of a war-affected spending slowdown among advertisers hit media stocks and Daily Mail & General Trust fell 27.5p to 462.5p, Reuters slipped 7.75p to 101.5p, FT-owner Pearson eased 21.75p to 480.5p and Reed Elsevier fell 28p to 452p.

Other blue-chips on the way down included property group Canary Wharf after it announced London Underground had activated a break clause on its Docklands offices.

Shares in the group have been hit in recent weeks by fears of higher vacancy rates and the stock slipped another 6p to 145p today.

Outside the Footsie, one of the most significant corporate announcements came from Durex-to-Scholl company SSL after it said it would sell its medical division.

Shares fell 13%, or 24p to 166p as SSL also revised down sales forecasts.

However, retailer Austin Reed continued to benefit from bid speculation as shares rallied another 4% or 5.5p to 138.5p.

The stock had been at 100p earlier in the year but has been lifted by takeover interest from family-owned firm Slater Menswear and reports that other suitors could be waiting in the wings.

The only Footsie risers were Safeway up 2.75p at 260.75p and Gallaher up 5.5p at 610p.

The top five fallers were Dixons down 7p at 85.5p, Prudential down 24.5p at 308.5p, Aviva down 27.25p at 352p, Reuters down 7.75p at 101.5p and ICI down 7p at 92p.

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