FTSE falters

Investors endured a miserable start to the week after the FTSE 100 Index tumbled 1% on the back of worries over the weak US dollar today.

The continued sell-off in the greenback weighed on those companies with dollar revenue streams, such as mining stocks.

And higher oil prices added the pressure on many heavyweight companies as the Footsie struggled for a second successive session to close down 72 points at 6050.1.

Takeover speculation involving housebuilding and travel stocks offered some relief, but in the end only six top flight firms were in positive territory.

Among the heaviest fallers, Hanson fell 21.5p to 719.5p, while telecoms company Cable & Wireless was down 4.75p to 155.25p, a drop of 3%.

BAE Systems was under pressure after a newspaper report said the government of Saudi Arabia had warned the company it could pull out of a contract to buy 72 Eurofighters. Shares were 12.5p lower at 391p, a fall of 3%, while engine maker Rolls-Royce was down 10p to 428.75p.

Currys owner DSG International was another stock on the retreat, down 6.5p to 195p, as investors continued to fret about Christmas trading prospects following its disappointing profits guidance of last week.

Takeover target ITV was one of the few top flight risers – up 1.25p to 112.5p.

A flurry of merger and acquisition activity at least sparked excitement among mid-cap stocks.

Shares in housebuilder Wilson Bowden and travel company First Choice Holidays soared in the FTSE 250 Index after they both said they were in talks over possible deals.

Wilson Bowden was up nearly 15% or 267p to 2098p after it said it had received takeover approaches from a number of parties.

The news sent its value soaring to £2bn (€2.9bn) as investors gambled on an offer being made, while the rest of the sector was also in positive territory.

Blue-chip rival Persimmon gained 6p to 1387p, while one of the possible bid candidates, Redrow, was up 2% or 12.5p to 636.5p. Bellway and George Wimpey have also been identified as potential bidders and were up 11p to 1370p and 1.5p to 520.5p respectively, despite giving back some of their earlier gains.

First Choice Holidays jumped 13% or 29.5p to 257p after it said it was in discussions over the sale of its package holidays business, which includes brands such as Falcon and Sunstart.

MyTravel, which confirmed its interest as a possible buyer, lifted 14.25p to 214p, even though it said it may issue shares to pay for the business.

Among companies with results today, security and cleaning firm MITIE rose 7.75p to 214.5p, following a 28.3% rise in half-year profits. It was helped by the acquisition of Rentokil Initial’s security arm.

The biggest Footsie risers were ITV up 1.25p at 112.5p, Kazakhmys ahead 8p at 1152p, Enterprise Inns up 7p at 1207p and BSkyB ahead 2.5p at 525p.

The biggest fallers were DSG International down 6.5p at 195p, Drax off 27p at 822.5p, BAE Systems down 12.5p at 391p and Lonmin off 92p at 2970p.