Tension over North Korea and Iraq depresses market

INVESTORS returning from the Christmas break were given a jolt yesterday as the FTSE 100 Index tumbled to its lowest close since October 10.

Only three blue-chips made any ground as tension over Iraq and North Korea hit already frayed nerves in the City.

With little support from markets on Wall Street, the Footsie ended a dismal day down 112.7 points at 3829.4 a drop of nearly 3%. Banking and drug stocks were among the heavy fallers, as were high street retailers as signs of a subdued Christmas on the high street began to emerge. And with just 488 million shares changing hands, analysts are expecting a depressing end to the year in the City next week.

Oil giants BP and Shell also fell back as profit-taking offset a climb in the oil price above the key $30 US a barrel mark.

But the main interest was centred on the retail sector after department store group John Lewis and jewellery chain Goldsmiths posted mixed updates. The statements fuelled fears the festive period was nowhere as buoyant as last year. Among those on the slide were Dixons, off 5.25p at 142p and B&Q-to-Comet group Kingfisher, off 2.5p at 211p.

In the Footsie, the only climbers were BAE Systems, up 3.5p at 127.25p, Reckitt Benckiser, up 20p at 1190p and Bradford & Bingley, up 2p at 288p.

The heaviest fallers were Granada, down 4.75p at 73p, Royal & Sun Alliance, off 7.5p at 116.5p, Invensys, off 3.25p at 50.75p and Aviva, off 22p at 434.5p.