Footsie down as leading shares slide

London’s leading shares slipped back into negative territory today for the second session in a row after a weak opening on Wall Street depressed confidence and stripped away earlier gains.

By the close of trading, the Footsie had shed 25.4 points to finish the day at 4077.1 despite being ahead for much of the session.

Trading was dominated by a tough session for retailers, after high street favourite Marks & Spencer saw profit takers move to cash in on the stock’s recent strength, causing its shares to tumble 7%.

Markets had held firm until trading opened in New York where the Dow Jones Industrial Average was down by more than 60 points as London closed.

Dealers said investors were reacting to comments from Federal Reserve chairman Alan Greenspan that deflation in the US remained a threat, although he did also express hopes of stronger growth by the end of the year.

M&S, which saw its shares slide 23.75p to 311.25p, also suffered from concerns about the performance of its home division which offset the encouragement offered by a 3.8% rise in like-for-like sales for the first quarter.

Besides M&S the major retail movements saw Dixons down 4.5p at 138.25p, Next off 8p at 1084p and Argos owner GUS losing 11.25p at 711.75p.

As well as being hit by the retail gloom, high street chemists Boots and Alliance UniChem were again out of favour amid nervousness ahead of a forthcoming Government decision on deregulation.

Boots was off 12.5p at 641.5p while Alliance UniChem fell 20p to 482.75p.

Financial stocks were also struggling by the close despite generally high hopes for the forthcoming banking reporting season.

Royal Bank of Scotland rose 29p at 1759p, while HBOS fell 24p at 772p, Alliance & Leicester lost 11p at 836.5p and Abbey National slipped 14p to 493p. Barclays fell 1.25p at 459.75p

But there was better news for insurance group Aviva, which yesterday announced plans to cut costs by reducing its headcount, rising 3% or 13p to 486p.

Royal & Sun Alliance also cheered 0.5p to 159.25p but Legal & General lost 0.75p to 92.5p and Friends Provident shed 0.5p to 128.75p.

Outside the Footsie, discount retailer Peacock shrugged off the retail malaise, rising 8p to 160p after reporting a “flying start” to its financial year because of fine weather in April and June. Like-for-like sales rose 10.8% in the first quarter.

And GB Railways surged 29.5p to 301p after the Hull Trains operator received a takeover approach from FirstGroup.

GB rose as FirstGroup – interested in GB’s position in the bidding process for three rail franchises – said it would offer as much as 500p a share for the company. FirstGroup fell 4p to 260p.

Leading the Footsie risers were Aviva up 13p at 486p, Shire Pharmaceuticals up 10p at 424.5p, Johnson Matthey up 19p at 905p and Royal Bank of Scotland up 29p at 1759p.

The fallers were Marks & Spencer down 23.75p at 311.25p, Old Mutual down 4p at 92p, Alliance UniChem down 20p at 482.75p and Foreign & Colonial Investment Trust down 7p at 171p.