NHS cash crisis drags Footsie down

The London market was on the slide today as investors deserted mining companies and the cash crisis in the NHS took its toll on medical devices maker Smith & Nephew.

The FTSE 100 Index fell nearly 1% or 44.3 points to 6060 while the FTSE 250 Index fell back from last night’s all-time high of near 10,000 to 9925.6.

Pharmaceuticals stocks and mobile phone group Vodafone survived the sell-off with the former making headway in the wake of strong first quarter results from AstraZeneca and GlaxoSmithKline, up 64p and 46p to 3055p and 1532p respectively.

Vodafone shares received a much needed boost, up 2.75p to 130.5p, as it confirmed a £6 billion return of cash to shareholders following the sale of its Japanese business.

But attention was on mining stocks after the Chinese government increased its main interest rate, fuelling fears about the sustainability of growth there.

Goldman Sachs also reviewed its ratings for the sector, including a downgrade for BHP Billiton – off 33.5p at 1138.5p.

Others giving back recent gains included Kazakhmys with a fall of 37.5p to 1168p, while Anglo American was off 83p at 2334p and Xstrata lost 66p to 2015p.

Oil stocks were also on the slide with Royal Dutch Shell down 45p to 1993 and BP 14.5p lower at 683.5p.

But those losses were exceeded by the biggest faller of the day Smith & Nephew as it shocked the market with a warning that tough trading conditions – caused in part by NHS budget constraints – had left first-quarter profits below hopes. Shares dived by as much as 11% at one point before settling 9% or 48p lower at 462p.

The market’s sharp sell-off also caught out financial stocks, even though insurer Aviva had earlier impressed investors with better-than-expected sales figures from its long-term savings business.

Shares in Aviva were down by more than 1%, off 11p to 801.5p – giving back the gains seen after the group revealed life and pensions sales of £6.79 billion in the first three months of the year, easily beating City forecasts.

Friends Provident began the day in positive territory as its shares benefited from optimism ahead of its own first-quarter new business figures tomorrow. But it gave back those gains to stand 3.5p cheaper at 196.25p, while Legal & General was 2.5p lower at 139.75p.

Outside the top flight, companies in the home credit loans market were under pressure after the Competition Commission said customers in the sector were being overcharged for products by up to £100 million a year. Provident Financial fell 15.5p to 633.5p, while Cattles was off 2.75p at 376.75p.

But online gaming group 888 Holdings went the other way – up 7p to 244p – as it mirrored gains by top flight rival PartyGaming, which was up 5% or 6.75p to 152.75p.

The day’s biggest blue chip risers were PartyGaming up 6.75p to 152.75p, GlaxoSmithKline 46p higher at 1532p, Vodafone up 2.75p to 130.5p and Astrazeneca up 64p to 3055p.

The heaviest fallers were Smith & Nephew down 48p to 462p, Antofagasta off 110p to 2358p, British Energy Group down 24.5p to 657.5p and Anglo American 83p lower at 2334p.