US concerns ground FTSE

The London market was grounded today as concerns regarding the US sub-prime mortgage sector resurfaced following two days of gains.

The FTSE 100 Index was down more than 1%, or 70 points at 6323.9, as banking stocks weighed heavily after French bank BNP Paribas froze more than £1bn of funds after citing problems in the US sub-prime sector.

Among the UK banks, Barclays was off 23.5p at 689p, HBOS slid 31p to 928.5p and Royal Bank of Scotland dropped 20.5p to 578.5p.

On a positive note, better-than-forecast figures from defence giant BAE Systems saw the group’s shares surge ahead today. The firm was up 4%, or 16.25p to 452.5p, after posting half-year underlying profits up by £100m at £700m.

Strong figures from investment group Schroders helped the firm make advances despite the wider depressed market.

The global asset manager was ahead 29p at 1315p after reporting that group pre-tax profits increased by 40% to £185.6m, with funds under management also up, by 7% to £137.6bn since December.

Newspaper group Daily Mail & General Trust fell 4% or 26p to 669p after it unveiled plans to buy internet job board operator JobsGroup.net to expand its web business.

Half year results from insurance giant Aviva, parent of Norwich Union, saw the group lose 0.5p to 705p after it unveiled an 8% fall in operating profits.

The cost of claims relating to the June floods offset strong growth elsewhere in the business.

The news impacted fellow insurer Standard Life, which dipped 12p to 329p, after it also suffered from a broker downgrade from Cazenove.

In the FTSE 250 Index, telecoms testing firm Spirent Communication lost 4% or 2.75p to 67.25p as news of a first half loss caused concern among investors, in spite of hopes for a better second half performance.