FTSE closes 109 points down

The London market continued its rollercoaster ride today, closing deep in the red as hopes of a prolonged revival began to fade.

The FTSE 100 Index regained some of its poise after a 145.2 point slump in the first hour of trading, but still saw a decline of more than 100 points at close, down 109.5 points to 6250.6.

Persistent credit fears in the US caused the Footsie to plummet, with worse than expected US manufacturing data adding to the market’s malaise and wiping out nearly all of the gains made yesterday in the short-lived rally.

Surprisingly positive pending home sales data in America did little to soothe investors left shaken by news that a leading American mortgage company was facing insolvency due to rocketing default rates.

Only a handful of leading London stocks were in positive territory as the uncertainty spread.

Confectionery group Cadbury Schweppes topped the Footsie fallers with a drop of more than 8%, or 51p to 569p, after it reported a 6% fall in underlying operating profits.

Analysts were disappointed after the Dairy Milk maker warned that margin improvement would be unlikely this year.

Heavily-weighted mining stocks also littered the fallers’ board with Rio Tinto 161p lower at 3445p, BHP Billiton off 65p at 1408p, Vedanta Resources down 72p at 1717p and Xstrata off 124p at 3074p.

Banks suffered badly after the UK’s biggest lender, HBOS, reported weaker-than-expected retail growth, despite posting overall pre-tax profits ahead of forecasts. Shares slid 3%, or 27.5p to 942p, although the group had at one stage lost 5% on news of the poor retail growth.

Fellow mortgage lender Northern Rock also slid in HBOS’s wake, down 35.5p at 781p, or 4%.

Elsewhere in the sector, Royal Bank of Scotland slipped 13.5p to 579p and Lloyds TSB fell 5p to 553p.

Carrier British Airways fell 3% – down 11.5p to 386.25p – after it was fined a record £121.5 million by the Office of Fair Trading and a further 300 million US dollars (£150m) by the US Department of Justice for collusion over fuel surcharges on long-haul flights.

Brewer SAB Miller appeared to fall victim to the wider market troubles, down 43p at 1230p, or 3%, as an upbeat note from Merrill Lynch after yesterday’s strong first quarter results failed to prevent the group making it on to the list of share fallers.

Pharmaceutical firm Shire led the handful of Footsie risers, up 19p at 1237p, with Dulux paint make ICI not far behind, ahead 3.5p at 627.5p

ICI, which is being stalked by Dutch rival Akzo Nobel, made the advances on reports that Dow Chemical may make a counterbid for the group and gatecrash Akzo’s £7.8 billion offer.

The biggest Footsie risers were Shire up 19p at 1237p, Standard Life up 3.5p at 312p, Imperial Chemical Industries up 3.5p at 627.5p and Vodafone Group up 0.4p at 150.4p.

The biggest Footsie fallers were Cadbury Schweppes down 51p at 569p, Man Group down 31p at 537p, Rio Tinto off 161p at 3445p and BHP Billiton down 65p at 1408p.