Footsie closes more than 1% lower

London’s FTSE 100 Index closed more than 1% lower today as investors took profits after a three day upward run.

The prospect of breaking through the 4000 barrier appeared to be the catalyst for the slump as an initial surge of 51 points to 3967 in the first hour turned into a fall of 61.9 points to 3854.9 by the end of the session.

A tepid start to trading on Wall Street during the afternoon further encouraged the London market to pause for breath after a week of progress.

Financial-based stocks, which have traced the movements of the blue-chip index in recent weeks, dominated the Footsie fallers board.

They were led by Friends Provident, down 8p at 91.25p, while Prudential eased 10.5p to 365.5p and Legal & General slipped 4p to 75.25p.

Banks fared little better and Lloyds TSB, which today confirmed it would end its protracted search for a merger partner, fell 5% or 19.75p to 388.25p.

It was closely followed by Barclays, off 20.5p at 405.5p, Abbey National down 18p at 422p and Halifax owner HBOS, was 20p lower at 717p.

All the major supermarkets – except takeover target Safeway – were in negative territory, with Tesco down 11.75p at 191.5p, Sainsbury’s off 3p at 240p and Morrisons 5p lower at 189p.

Outside the top flight, Somerfield, which yesterday soared after news of takeover interest, lost 1.25p to reach 89.75p.

On a brighter note, media and retail stocks were in the spotlight as investors digested news from both sectors.

Topping the FTSE 100 Index risers board was Argos-to-Homebase owner GUS, which saw shares lift 7% or 36.5p to 570p after an upbeat second half trading statement.

The group said Argos sales topped £3bn (€4.34bn) in the full year for the first time.

It was a better session for media stocks after a broker upgrade for satellite broadcaster BSkyB – up 19p at 657p – and an update from news and information group Reuters calmed investors’ nerves.

Reuters climbed 2% or 2.25p at 120p despite a 10% fall in underlying revenues, as analysts expressed relief that the figures were broadly as expected.

Also in the sector, FT owner Pearson climbed 9p to 547p, but ITV broadcaster Granada gave back gains to stand unchanged at 66.25p. Merger partner and FTSE 250 stock Carlton rose 1.5p to 99.75p.

Elsewhere, the weaker market also wiped out early gains made by Ovaltine and Twinings tea group Associated British Foods after it posted a 14% rise in half-year operating profits. Shares were down 0.5p at 525p.

Outside the top flight, security services group Chubb surged 19% or 12.75p to 879p after confirming a bid approach, while greetings cards and gifts chain Clinton Cards lifted 7.5p to 180p following full-year results.

The biggest Footsie risers were GUS up 36.5p at 570p, Centrica ahead 6p at 169p, BSkyB up 19p at 657p and Rexam up 8.5p at 374.5p.

The biggest fallers were Friends Provident down 8p at 91.25p, Tesco off 11.75p at 191.5p, Hanson down 18.75p at 322p and Legal & General off 4p at 75.25p.