BAE shares slump over fraud concerns

Shares in BAE Systems were 4% lower today after the Serious Fraud Office recommended the firm face prosecution over bribery allegations.

Shares in BAE Systems were 4% lower today after the Serious Fraud Office recommended the firm face prosecution over bribery allegations.

The move, which follows an investigation carried out by the SFO into the business activities of BAE Systems in Africa and Eastern Europe, caused shares to drop 15.4p to 333.7p by mid-morning.

The wider London market was also under pressure after enjoying its best-ever quarter in the three months to the end of September. The FTSE 100 Index opened on the front foot but later stood 23.5 points lower at 5110.4.

The mood was initially positive after the International Monetary Fund said the world economy was reviving more quickly than expected. The forecasts included a much stronger prediction of UK growth in 2010, but this was offset by a separate study showing a disappointing manufacturing performance in September.

With corporate news in short supply a mix of broker upgrades and bid rumours continued to drive some of London’s strongest risers.

Miner Vedanta Resources led the market higher, up 88p to 1990p or 5% after Morgan Stanley said the shares could potentially double.

Another beneficiary of positive broker comment was heating and plumbing firm Wolseley, 56p better at 1563p after Citi upgraded it to buy.

Meanwhile insurer Legal & General cheered 2.8p to 90.65p as speculation of takeover interest, possibly from National Australia Bank, refused to die down.

Miners caused much of the pressure on the London market, with Lonmin down 58p at 1616p and Antofagasta off 20.5p at 739p.

In the FTSE 250 Index, dairies firm Robert Wiseman surged 5% or 22.4p to 443p after it said half-year profits were likely to be ahead of management expectations.

Domino’s Pizza made a similar statement about its full-year results and saw its shares climb 1.8p to 293.8p as a result.

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