FTSE falls despite Corus takeover

A strong gain at steel group Corus could not save the FTSE 100 Index from falling into negative territory during a lacklustre session for the London market today.

A strong gain at steel group Corus could not save the FTSE 100 Index from falling into negative territory during a lacklustre session for the London market today.

The Footsie ended the session down 38.9 points at 6203.1 as investors paused for breath ahead of the announcement of the US Federal Reserve’s interest rate decision after the markets closed.

Corus climbed nearly 7% as investors cheered the 608p takeover offer from Tata Steel, equivalent to £5.75 billion excluding debt. Tata fended off rival CSN in a head-to-head auction run by the Takeover Panel on Tuesday night. The shares, which stood 200p less than two years ago, closed up 38.5p at 601.5p.

Telecoms group Vodafone gained 1p to 148p after it announced that customer numbers had passed the 200 million mark and the company reported improved trends in the UK. Investors also gained confidence from Vodafone’s comments that it would not pay over the odds for a controlling stake in India’s Hutchison Essar.

Insurer Friends Provident topped the FTSE 100 fallers’ board, with a fall of 4%, or 9p to 217p after it emerged that subsidiary F&C would cut its dividend level and reduce its operating margins by 30% in 2007. The pensions side of Friends did well in a third quarter trading statement, but analysts remained cautious about future levels of profitability.

The news impacted the rest of the insurance sector, with Legal & General down 2p at 154.75p, Norwich Union owner Aviva off 11p at 821p, while Prudential lost 9p to 686p and Royal & Sun Alliance slipped 2.25p to 161p.

Banking groups also lost ground with Barclays down 12.5p at 740p and Alliance & Leicester off 16p at 1074p.

International advertising group WPP gained ground after it announced it had acquired the data collection company All Global Limited. The stock ended 9p higher at 747p.

BSkyB recouped earlier losses after the City initially gave interim figures from the satellite broadcaster the thumbs down.

Figures for the second quarter were slightly lower than expectations, due to higher churn rates, but investors turned positive after a strong start for BSkyB’s new broadband operation. Shares were up 1p at 546p.

Retailers also featured on the risers board, with B&Q owner Kingfisher up 4.25p at 239.25p and DSG International ahead 1.5p at 168.75p.

Financial Times publisher Pearson was on the back foot, down 14p at 802p after JP Morgan downgraded the stock following a review of European publishing stocks.

Outside the top flight, Britvic shares edged ahead 1.75p to 300.5p after the drinks firm said it had outperformed its market. Its shares fell earlier in the session after it warned its carbonates division would remain under pressure from healthier lifestyle trends.

The biggest Footsie risers were Corus up 38.5p at 601.5p, Kingfisher ahead 4.25p at 239.25p, WPP up 9p at 747p and Amvescap ahead 6p at 607p.

The biggest fallers were Friends Provident down 9p at 217p, British Airways off 13.25p at 537.75p, Reuters down 10p at 431.5p, Pearson off 14p at 802p.

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