FTSE dives into red

Another miserable session for online gaming stocks took the shine off record profits at Tesco today as the London market dived into the red.

Another miserable session for online gaming stocks took the shine off record profits at Tesco today as the London market dived into the red.

Party Poker operator PartyGaming followed up yesterday’s 58% fall with a drop of 4% today as investors continued to react to the US clampdown on internet gambling.

The losses offset a strong performance by Tesco as the FTSE 100 Index sank 43.8 points to 5914 by mid-morning.

Tesco shares lifted 1% or 2.75p to 368.25p after the supermarket posted record first half profits of £1.09 billion – a rise of more than 10% on the same period of 2005 and leaving it on course to bank around £2.5 billion for the full year.

The record haul at Tesco boosted rival supermarkets with Morrisons up 2p to 244.75p, while Sainsbury lifted 1.75p to 378.75p.

But uncertainty still surrounded online gaming firms after yesterday’s bloodbath which saw the sector lose half its value.

Shares in PartyGaming were down a further 1.75p to 43.25p today while mid-cap rival 888 Holdings fell 2% or 2.25p to 106p and Sportingbet slumped 5% or 3p to 63p.

Elsewhere in the gaming sector, casino operator London Clubs International lifted 1.5p to 124.5p as its proposed takeover by Las Vegas giant Harrah’s Entertainment appeared to be on course despite private equity interest in the US firm yesterday.

Back among blue chip stocks, oil firms weighed heavily on the market after a fall in the price of crude. BP was 12.5p lower at 570p and rival Royal Dutch Shell slipped 22p to 1781p, although the lower cost of fuel helped British Airways lift 3p to 432.5p.

Severn Trent gave up early gains to stand 5p lower at 1358p as investors expressed concern over higher costs facing the water company, even though its trading update met expectations in the City.

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