Footsie continues to slide

The FTSE 100 Index slid further into the red today as investors withdrew from stock markets around the world amid fears over inflation and the impact of a weak US dollar.

The Footsie fell by as much as 156 points in early trading following its heaviest percentage decline for two years on Friday.

But it recovered some of the losses to close 70.8 points lower at 5841.3 after stocks on Wall Street opened slightly higher.

However, analysts believe it is too early to say the bull market that has seen shares rise in value by a third over the past two years has completely run out of steam.

Jeremy Batstone, of Charles Stanley Stockbrokers, said: “It’s a correction at the moment and it’s too early to call it anything more sinister.”

Mining stocks, which post results in US dollars, were badly affected by the decline in the value of the greenback, as well as a sharp fall in commodity prices. Xstrata dropped 8%, or 202p to 2208p, Kazakhmys dived 8%, or 111p to 1204p, while BHP Billiton was off 66p at 1102p.

Plumb Center and Build Center chain Wolseley was 4% lower, down 47p to 1242p, as it has sizeable presence in the United States.

But BT topped the risers board – up 3% or 5.5p to 216p – ahead of full-year results on Thursday and following reports it is to announce it has reduced its pension deficit.

Vodafone was also ahead 1%, or 1.5p at 125.25p, amid renewed speculation it could sell its Verizon stake in the US.

Outside the top flight, Cambridge Antibody Technology Group showed the most spectacular rise. The biotech group was up 64% – a gain of 508p to 1299p – after agreeing to back a takeover approach from pharmaceuticals giant AstraZeneca in a deal worth £702 million. AstraZeneca was off 7p to 2850p.

Food equipment group Enodis rejected an offer at the weekend but saw its shares rise 24p to 199.5p after it posted strong results with a rise in pre-tax profits of 71%. US-based corporation Middleby is behind the takeover interest.

And shares in hotel and leisure group De Vere were up 12p to 8165p, on reports the private property group Delancey has joined the list of bidders for the company.

Delancey is understood to be keen to team up with a private equity bidder to split the property assets from the operating company.

CMC Markets trader Jimmy Yates said: “The Footsie may have bounced back off earlier lows but the London index remains stuck in negative territory.

“Inflation fears have hit financial stocks whilst the prospect of falling demand for commodities has driven oil and gold lower in turn hitting the mining and petrochemicals sectors too.”

The day’s biggest blue chip risers were BT up 5.5p to 216p, National Grid up 8.5p to 560.5p, Vodafone up 1.5p to 125.25p, and Lloyds TSB 4p higher at 510p.

The heaviest fallers were Kazakhmys down 111p to 1204p, Xstrata off 202p to 2208p, Antofagasta 169p lower at 2273p and Anglo American down 143p at 2282p.