London close: Banking fears prompt slide
Weak US economic data and further worries about bank write-downs have sent US equities lower and spoiled the party for London too.
Citigroup's downgrade of Alliance & Leicester hit the bank's shares, while others in the sector also lost out including Lloyds, HBOS and Standard Chartered.
Bank of Ireland said trading was in line with expectations but made €70m of provisions as it warned the volatility in the market could change the outcome for the year.
Transport stocks had their share of knocks today. British Airways fell sharply after settling a class action suit from disgruntled customers. British Airways and Virgin Atlantic have agreed to pay out a total of £102m to customers who were overcharged by the airlines between August 2004 and March 2006.
Bus and rail firm First Group was the biggest faller among blue-chips as it dropped in sympathy with Go-Ahead Group. Go-Ahead fell by about one-sixth after half year revenues rose though profits slipped as it said the bus division could be affected by increased fuel costs and warned full year operating profit below could be below last year.
Goldman Sachs published an appraisal of the insurance sector and upgraded its rating to "neutral" from "underweight". Admiral, Prudential and Friends Provident felt the most benefit from Goldman Sachs's recommendation, with the latter further boosted by ever-present bid speculation.
Vedanta Resources was the biggest blue-chip gainer after UBS recommended buying the shares. The bank had previously been neutral on the stock. Kazakhmys was also higher, while in the FTSE 250, Hochschild Mining was higher as platinum prices remain strong. However, the sector's fortunes were mixed, with Antofagasta sharply lower.
UBS is less enamoured of British Land than it was. It is now neutral on the stock having previously rated it a "buy", and has reduced its price target to 1,050p from 1,135p.
Investors followed in the footsteps of super-investor Warren Buffet and bought GlaxoSmithKline following news that Buffet's investment vehicle, Berkshire Hathaway, has taken a stake in the drugmaker. AstraZeneca edged higher in sympathy.
Tate and Lyle said pre-tax profit for the four months to 31 January was marginally ahead of expectations, but the EU sugar market is expected to remain difficult. Elsewhere in the food sector Premier Foods was wanted ahead of today's report on the UK grocery market from the Competition Commission.
The two remaining suitors for Northern Rock have reportedly been told to submit their revised offers for the troubled lender by tomorrow so that the Treasury can make a decision next week.
Rumours indicate that Chancellor Alistair Darling could make an announcement as early as Monday. Shares in the troubled bank moved lower.
British Gas owner Centrica has added to its gas assets in the North Sea by acquiring a 50% stake in gas fields held by Sojitz Energy for $70m in cash.
Croda surrendered early gains that were won after Deutsche Bank initiated coverage of the company with a "buy" recommendation and a price target of 650p. The German bank also likes outsourcing outfit Serco, which it rates a "buy" with a price target of 545p.
Oil and gas explorer Meridian Petroleum, which is in takeover talks, said it may not meet shareholders expectations for growth in the short term.
A revival of speculation about a private equity bid lifts bookmaker Ladbrokes.
Business software maker Touchstone said adjusted year-end pre-tax profits are likely to be slightly below previous expectations and behind last year due to increased delivery costs, lengthening procurement cycles and further R&D costs.
Accident prone tableware group Waterford Wedgwood finished in the red after it said it is likely to make a loss this year and earnings will be substantially below market expectations.
Flat panel loudspeaker company NXT is on the up after licensing some its technology to Australian company Akoustiks.
Weatherly surged ahead after the mining group said it had received an initial approach that may lead to an offer. "The company proposes to consider the approach and will make a further announcement in due course," it said.
Electronic components company e2v Technologies said it expects overall outcome for the full year to be in line with expectations.
FTSE 100 - Risers
Vedanta Resources (VED) 2,072.00p +3.39%
Kazakhmys (KAZ) 1,365.00p +2.32%
Cadbury Schweppes (CBRY) 597.00p +1.88%
Johnson Matthey (JMAT) 1,979.00p +1.49%
BT Group (BT.A) 234.75p +1.40%
Admiral Group (ADM) 948.00p +1.34%
Thomas Cook Group (TCG) 292.50p +1.21%
GlaxoSmithKline (GSK) 1,112.00p +1.00%
Smith & Nephew (SN.) 679.00p +0.59%
British Energy Group (BGY) 545.00p +0.55%
FTSE 100 - Fallers
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FirstGroup (FGP) 605.50p -6.27%
Schroders NV (SDRC) 839.00p -4.28%
Standard Chartered (STAN) 1,531.00p -4.13%
British Airways (BAY) 278.25p -3.97%
Schroders (SDR) 930.50p -3.97%
British Land (BLND) 932.00p -3.82%
Sage Group (SGE) 215.00p -3.70%
Cairn Energy (CNE) 2,461.00p -3.68%
Next (NXT) 1,337.00p -3.60%
Lloyds TSB Group (LLOY) 395.75p -3.59%
FTSE 250 - Risers
Electrocomponents (ECM) 188.25p +3.15%
Ladbrokes (LAD) 329.00p +2.41%
COLT Telecom Group S.A. (COLT) 152.75p +2.00%
Hochschild Mining (HOC) 429.50p +1.78%
Rotork (ROR) 915.50p +1.67%
WSP Group (WSH) 498.00p +1.63%
Hunting (HTG) 727.50p +1.39%
Talvivaara Mining (TALV) 312.50p +1.21%
Serco Group (SRP) 451.25p +1.18%
Morgan Crucible (MGCR) 191.00p +1.06%
FTSE 250 - Fallers
Go-Ahead Group (GOG) 1,840.00p -17.67%
Stagecoach Group (SGC) 222.50p -9.64%
Investec (INVP) 380.00p -7.32%
Northern Rock (NRK) 90.00p -6.49%
National Express Group (NEX) 1,063.00p -5.68%
Bradford & Bingley (BB.) 176.25p -5.50%
Rathbone Brothers (RAT) 1,000.00p -5.48%
Carpetright (CPR) 709.00p -5.40%
Dignity (DTY) 725.50p -5.16%
Daejan Holdings (DJAN) 3,510.00p -5.14%
