Morrisons and Capita scandal send FTSE down

The FTSE 100 Index sank into the red today as Morrisons disappointed investors and the head of Capita Group quit because of publicity surrounding his decision to loan money to the Labour Party.

The FTSE 100 Index sank into the red today as Morrisons disappointed investors and the head of Capita Group quit because of publicity surrounding his decision to loan money to the Labour Party.

Shares in both companies were down 4% and dragged the Footsie back below the 6000 mark as the London market again failed to consolidate previous gains.

But progress on Wall Street overnight and by British Airways today prevented a larger sell-off as the Footsie slipped 14.6 points lower to 5992.9 by mid-morning.

Capita shares were down 16.5p to 453.25p after Rod Aldridge quit as chairman amid “spurious” claims that the company won British government contracts following his £1m (€1.4m) loan to the Labour Party.

Capita was beaten to the top of the fallers board by Morrisons, which disappointed investors with lack of detail in its three-year turnaround plan. Shares in the supermarket chain, which posted an 81% fall in annual profits, were down 9p to 201p.

The retail sector was also under pressure as Next fell 41p to 1685p after the high-street fashion chain said the competitive and economic environment was likely to remain tough over the coming year. Next was followed lower by Marks & Spencer, off 10.5p to 553.5p.

Property firms were hit by profit taking after they racked up strong gains yesterday when Chancellor Gordon Brown amended proposals for Real Estate Investment Trusts (REITs).

Land Securities, which advanced 13% in the previous session, weakened 44p to 2036p while British Land faded 45p to 1255p and Hammerson dipped 18p to 1282p.

British Airways went in the other direction after unveiling plans to tackle a £1bn (€1.4bn) deficit in its pension fund.

Shares soared 9.25p to 370p as investors gave a positive welcome to proposals by the carrier to increase the retirement age for its pilots and other workers and then inject £500m (€722.3m) into the fund.

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