Bad day for insurance firms on FTSE

Insurance firms crashed today after Aviva’s annual results failed to settle nerves in the sector.

The Norwich Union and Hibernian owner posted decent full-year figures and maintained its dividend, but sentiment remained weak as shares dived 27% on continued fears about the company’s capital buffer.

The rest of the sector followed Aviva’s lead with double-digit declines, causing the FTSE 100 Index to slump 2% or 76.6 points to 3569.2 by mid-morning.

The top flight rose 133 points yesterday – following a cumulative slump of 8% on Monday and Tuesday – after Chinese authorities moved to stimulate growth in the world’s third largest economy.

Commodity stocks were the main beneficiaries of Wednesday’s rise, but lost some of the gains today as Kazakhmys slid 10% or 28p to 253.75p and Anglo American dropped 68.5p to 965.5p.

Insurers occupied the first five positions on the fallers board, with Aviva down 82p at 203p, Friends Provident off 12.4p at 57.8p and Prudential down 40.5p at 235.75p.

Elsewhere, shares in Premier Foods jumped 22%, or 6.25p to 34.75p, after it unveiled a long-awaited plan to tackle its £1.8bn (€2.02bn) debt mountain. The Hovis and Branston Pickle firm will sell a 10.3% stake in itself to private equity company Warburg Pincus under plans to raise £379m (€426m) from shareholders.

British Airways shares fell 6.4p to 129p after it warned of a 5% fall in revenues and said it expected another operating loss in the 2009/10 year.

Temporary power provider Aggreko led the FTSE 250 Index after it said credit conditions had boosted demand for its equipment. It posted a 52.6% rise in full-year profits and said 2009 revenues should beat forecasts following a very strong start to the year.

Aggreko shares jumped 34.5p to 411.75p, a gain of 9%.