Financial stocks led a nervous London market lower today as the bluechip FTSE 100 Index added to the heavy losses of the previous session.
Investors were clearly still in the doldrums after downbeat trading updates from Unilever and brewer Heineken sent the Footsie 70 points lower on Monday.
By the close, the top flight index was down 27 points at 4060.9 as last week’s rally to a nine month high becomes a distant memory.
Dealers are now looking to the Federal Reserve’s decision on interest rates tomorrow to give impetus to markets. The Fed is expected to further trim US interest rates.
In London, insurers set the trend for the wider market with Friends Provident dipping 4% or 4.75p to 114p, while Royal & Sun Alliance lost 3%, or 3.75p, to 130p and Prudential eased 5.5p to 374.5p.
Banks were also under pressure, although HBOS and Alliance & Leicester kept their heads above water after positive trading statements.
HBOS rose 11.5p to 806.5p while A&L advanced 13p to 838.5p.
Mobile phone operator mmO2 also did its best to lift the market, topping the risers board with a 3% lift – up 1.75p to 58p – after reporting that its German arm had broken the five million customer mark.
Rival mobile operator Vodafone rose 0.25p to 120.5p.
After falling 11% yesterday, Unilever had another bad day, declining 15p to 481p as analysts downgraded the stock following the company’s statement that growth targets would have to be slightly lowered.
Elsewhere, supermarket stocks grabbed the attention after the Competition Commission issued a remedies report into the Safeway takeover saga.
While the commission has yet to rule over the battle for Safeway, an exhaustive issues letter raised concerns about bids from Asda, Sainsbury’s and Tesco and their potential threat to competition.
Safeway shares topped the biggest losers, down 13p at 260p, as chances of a lucrative deal with a big player like Asda appeared to fade.
The three London-listed bidders for Safeway all responded, with Sainsbury’s falling 6.75p to 251.25p and rival Tesco adding 2.5p to close at 211.5p.
Morrisons fell 7.25p to 181.75p despite receiving the most positive response from the Competition Commission report, according to City analysts.
Outside the Footsie, fellow high street retailer Woolworths moved up 0.25p to 37.75p after the group told dealers that trading in the first seven weeks of the second quarter met expectations.
Drinks companies had a mixed day following yesterday’s poor trading statement from Heineken.
After initially rising 3.5p to 669p, Guinness maker Diageo ended the day 3p off at 662.5p, while Allied Domecq lost an earlier 4p gain to finish up 1p at 343p.
The day’s biggest risers were mm02 up 1.75p at 58p, Man Group up 20p at 1252p, Alliance & Leicester up 13p at 838.5p and Kelda Group up 6.5p at 429.75p
The biggest fallers were Safeway, down 13p at 260p, Friends Provident off 4.75p at 114p, Morrisons off 7.25p at 181.75p and Sage Group down 5.75p at 162p.