Blue chips drag FTSE down

The London market’s recent recovery proved fragile today as blue-chip stocks slid almost 2% into the red.

The FTSE 100 Index hung on to most of Tuesday’s near-5% rally yesterday, but came under further pressure as downbeat economic news dampened sentiment.

A late sell-off on Wall Street hit Asian markets, alongside revised GDP figures showing Japan’s economy in the grip of its worst slump for 35 years. This left the Footsie 61.6 points lower at 3632.2.

Despite the wider market gloom, insurer Standard Life and supermarket Morrisons bucked the trend by delivering well-received annual results.

Morrisons was the leading Footsie riser after it announced a 7% rise in annual profits and confirmed its commitment to expansion over the year ahead.

Shares were up 4.5p to 250.25p, while rivals Tesco and Sainsbury’s retreated 1.3p to 314.1p and 2.5p to 299.75p respectively.

Standard Life also provided one of London’s biggest gains after it reported a 6% increase in operating profits and it said it would look for further cost cuts.

With Standard also reassuring investors over its solvency position, shares rallied 3.3p to 164.6p, an improvement of 2%.

It was a decent performance given the slide seen by rivals Aviva and Prudential, down 30.6p to 182.9p and 22p to 237.25p respectively. Aviva, the former Norwich Union firm, was under renewed pressure after Citigroup slapped a sell rating on the company.

Meanwhile, a trading update from Home Retail Group brought a mixed response, even though it said its Argos catalogue chain performed better than expected in the past two months. Shares opened higher but were later down 15.2p at 188.8p.

In the FTSE 250, Yellow Pages directories firm Yell was the leading faller, down 2.25p to 15p, or 13%. The company’s relegation from the second tier was confirmed yesterday.