FTSE falls, prompted by Smith & Nephew

Medical devices firm Smith & Nephew led an exodus from the London market today after warning of slower sales growth.

S&N was the heaviest FTSE 100 faller, off 6% or 34.5p to 509p, after lowering revenues guidance due to the impact of Hurricane Katrina and tough competition from new products.

This mirrored the performance by the Footsie, which lost 37.1 points to 5338, although oil stocks were the main downward force as the cost of a barrel of crude oil remained below $64 in New York.

BP – the Footsie’s largest stock – was almost 1% lower, down 6.5p at 632.5p, while rival Royal Dutch Shell weakened 15p to 1816p.

Official data showing inflation rose to 2.4% in August was another negative factor as it is expected to quieten calls among members of the Bank of England for more rapid cuts in interest rates.

Trading across the Atlantic also added negative momentum, with the Dow Jones Industrial Average standing around 70 points lower by the end of the day in London.

Pest control group Rentokil bucked the downbeat mood after a report that Gerry Robinson, the investor considering a takeover bid, was to meet with London analysts to try to boost support for his plans. Shares lifted more than 2% or 4p to 167p.

Insurance firm Friends Provident was another rare bright spot, gaining 0.25p to 173.25p after pleasing investors with a 46% rise in half-year profits.

But positive comments about insurance markets failed to ignite the rest of the sector where Prudential was 3p weaker at 513.5p and Legal & General gave up 1.25p to 110.75p.

The clouds above the insurance sector were also keeping the banking industry in the shade, with HBOS and Lloyds TSB among those on the back foot today – off 10.5p and 5.75p at 860p and 474.5p respectively.

Elsewhere, French Connection rose 16% or 40.25p to 285.25p as investors expressed relief that there was not another profits warning and agreed that the clothing retailer’s chances of a recovery were encouraging.

Redrow failed to move from its opening mark of 420p despite reporting that its profits were 7% higher during the second half of its financial year. Shares in the sector were hit by a disappointing update from Bovis Homes yesterday, but Bovis managed to cheer 5p to 607p today.

Software group Misys was the heaviest second tier faller, slumping 17% or 41.5p to 197.25p, as it revealed revenues from a number of major contracts would come in later than expected.

Publisher Bloomsbury lost 4.75p to 357p as a 12.4% rise in first half profits to £4.1m (€6.1m) failed to cheer investors.

The highest Footsie risers today were Rentokil Initial up 4p to 167p, AB Foods adding 16p to 848p, Scottish Power up 4.75p to 574p and Boots advancing 4p to 636.5p.

The heaviest fallers were Smith & Nephew down 34.5p to 509p, BG Group off 12.75p to 504.75p, Sage down 5.5p to 232.75p and Enterprise Inns off 19.5p to 844.5p.