Japan sell-off frightens investors as FTSE falls

Investors pulled their money out of the London market today after taking fright at a sharp sell-off in Japan and weak results from US technology giants.

The FTSE 100 Index spent the entire session in the red after the benchmark Nikkei index in Japan plunged more than 450 points overnight.

Although the Footsie recouped more than half the losses that it racked up during a torrid morning, it was still well adrift of recent four-and-a-half year highs at the close – off 35.3 points at 5663.7.

Problems in Japan stemmed from reports of a fraud probe at internet firm Livedoor which prompted a heavy fall in technology stocks and forced the Tokyo stock exchange to close 20 minutes early.

The technology sector suffered another blow when US-based bellwether Intel reported profits and revenues that missed analysts’ expectations.

High crude oil prices also cast a shadow over world markets and shares in British Airways dropped 3p to 321.25p in London on worries about its fuel bill.

Drugs giant AstraZeneca was the heaviest blue-chip faller – off more than 4% or 121p to 2679p – after losing a patent case in the United States over its heart drug. The firm said it would appeal the court’s decision.

Others firmly on the back foot came from a range of sectors, with online gaming group PartyGaming down 5.25p to 148.75p and cruise giant Carnival weakening 91p to 3265p.

Elite stocks that made it into the black were clustered in the retail sector and were led by DSG International after the owner of Dixons said sales surged on the back of demand for high-tech gift items. DSG added more than 4%, up 6.75p to 170.5p.

Supermarket giant Sainsbury’s was tracking its progress with a rise of 4p to 309p, while Kingfisher improved 2.75p to 235.75p, Tesco strengthened 2.75p to 315p and clothing chain Next ticked 21p higher to 1670p.

But elsewhere in the retail sector, FTSE 250 operator Woolworths was in the doldrums despite reporting healthy Christmas sales. The stock lost more than 12% or 4.5p to 32.25p as investors focused on changes to rental charges and news of lower profits from a distribution contract with Tesco.

Speculators homed in on Reg Vardy after directors of the car dealer ditched support for an offer by Pendragon to back a £492 million takeover by rival Lookers instead.

In a sign that the takeover race was not yet over, Vardy shares rose 12p to 900p to stand above the 875p-a-share offer tabled by Lookers yesterday afternoon.

Pendragon has said it is considering its options and its shares fell 0.5p to 470p as investors worried that it might overpay for control.

The highest Footsie risers today were DSG International up 6.75p to 170.5p, Centrica rising 6.5p to 258p, Scottish & Southern Energy up 16.5p to 1062p and Severn Trent rising 17p to 1127p.

The heaviest fallers were AstraZeneca off 121p to 2679p, PartyGaming down 5.25p to 148.75p, Capita Group off 14p to 413.25p and Rentokil Initial down 4.5p to 155.5p.