Footsie sinks into the red

London’s leading shares sank further into the red today as market watchers predicted a second lacklustre day on Wall Street.

London’s leading shares sank further into the red today as market watchers predicted a second lacklustre day on Wall Street.

The FTSE 100 index recovered from an early 14-point slip nearing break-even point by mid-morning.

But the deficit worsened with the index down 8.1 points to 4254 at lunchtime, as analysts forecast that many traders would sit on the sidelines until the release of big economic numbers tomorrow.

However, the Footsie stayed well above the 4200 threshold level as economic and corporate news provided the interest.

There was little news to move the market from the Bank of England, which kept UK interest rates on hold at 3.5%, but a clutch of blue-chip stocks issuing earnings updates provided market movements.

Insurance giant Royal & Sun Alliance shed more than 13% or 20.5p to 133.5p after announcing a £960 million rights issue and the outsourcing of 1,000 jobs.

Rivals were also down, with Norwich Union Owner Aviva off 1.5p at 527.25p, Prudential losing 7.25p at 472.75p and Legal & General 1.75p lower at 104.75p.

Banks came out in sympathy, with mortgage providers HBOS down 3.5p to 726.5p, Abbey National down 6.5p to 541.5p and Alliance & Leicester falling 10.5p to 896p. However, traditional “big four” member Barclays bucked the trend, rising 4.5p to 472p.

Transport operator Arriva was another loser, driving 3.75p lower to 382p, despite seeing profits rise thanks to stronger performances from its rail and bus businesses.

And drinks group Diageo lost earlier gains as traders digested a cautious outlook issued with its full year results. Shares fell 14.5p to 665p.

But retailer Next was in favour, topping the list of Footsie risers with a 28p increase to 1151p.

Medical groups were also doing well, with Alliance UniChem up 8p to 536.5p, AstraZeneca ahead 23p at 2589p and Smith & Nephew advancing 3.75p to 413.5p.

Outside the top flight, Northern Foods headed the list of FTSE 250 fallers, losing 25.75p to 134.25p, after announcing the departure of its chief executive in the wake of a profits warning.

International Power, the energy generator poised to take over the UK’s biggest power station, was also off 8.5p at 137.75p after blaming weaker wholesale electricity power prices for denting profits in the first half.

But Eurotunnel rose 1.5p to 59.25p despite press reports that it could face a showdown with French trade unions over its plans to run freight trains on the continent.

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