FTSE under pressure

Stagecoach shares went into reverse today after the transport company warned of downward pressure on profits in its rail division.

The group slid 20% or 35.1p to 136.3p after the South West Trains operator said the economic downturn and other challenges were likely to limit visibility for the division’s performance in the next financial year.

The rest of the London market was under pressure, with the FTSE 100 Index down 18.6 points at 4104.2 by mid-morning as investors paused for breath ahead of tomorrow’s decision on UK interest rates. The Bank of England could cut as much as 1% from its base rate, taking the level down to a record 2%.

The Stagecoach warning dragged shares in rival FirstGroup lower, off 27.75p at 402.25p, while in the FTSE 250 Index Go-Ahead shed 148p to 1024p as investors worried about the performance of its Southern and Southeastern services. National Express fell 61.75p to 484.75p, or 11%.

The biggest gain in the second tier came from packaging and office products firm DS Smith, which rose 14% or 7.75p to 59p. Profits for the half year fell to £44.1m (€51.4m), but investors were reassured by chief executive Tony Thorne’s comments on a “robust performance” going forward.

The heightened hopes of a further hefty cut in interest rates lifted Barratt Developments, which was ahead 3.75p at 54.25p. Barratt also announced continued progress on the sale of assets from its Wilson Bowden portfolio, with £109m (€127.1m) raised since the middle of last month.

Sports retailer JJB Sports was back under pressure after the Office of Fair Trading said yesterday it planned to investigate rival Sport Direct International’s purchase of a stake in the firm. This further dented JJB shares, which were off 3p at 12p amid wider concerns about its financial health.