Footsie falls below 4000 mark
The FTSE 100 Index tumbled back below the 4,000 level today as hefty falls from banking and insurance stocks hit the market.
The losses came after financial services group Britannic delivered a blow to the sector by warning that fragile stock market conditions could force it to defer annual bonus payments on savings plans and scrap its dividend.
Shares in the FTSE-250 firm slumped nearly 50%, off 161p to 166.5p, and the warning cast a cloud over its blue-chip rivals with Prudential and Aviva both down.
The falls knocked the Footsie, which reversed an early rise to tumble 55.7 points to 3949.2 by lunchtime.
The market was also subdued by expectations that Wall Street will drift on its opening in the US this afternoon.
Among the insurers pulling the London index down were Prudential, down 5%, or 20.25p at 440.75p, Aviva off 6%, or 26.75p at 452.75p, Royal & Sun Alliance off 5.75p at 121.5p and Legal & General 5p lower at 95.5p.
Banks were also on the slide, with Lloyds TSB off 16p at 433.55p, Royal Bank of Scotland down 47p at 1495p, Abbey National 13p lower at 515p and Standard Chartered off 7p at 713p.
Analysts said the falls were in direct reaction to Britannic’s warning – which reawakened worries about the impact of stock market slides on the insurance sector.
Alex Scott, analyst at Seven Investment Management, said: “The industry as a whole is facing not the easiest environment.”
He added: “The shock waves from Britannic’s warning seem to be going a little further than the life sector – to banks and other financials as well.”
Elsewhere, Anglo-Australian mining group BHP Billiton was off 4% as it revealed its chief executive had stepped down.
Brian Gilbertson had been well-respected in the City, and shares slipped 13.5p to 322.25p on the news.
British Airways was also lower, down 3.5p at 141.5p, following a profits warning from Dutch rival KLM. The market was also looking ahead to traffic figures due to be released by BA this afternoon.
Retailers had a mixed day as investors anticipated a wave of trading updates expected over the coming weeks.
Next was down 9.5p at 723.5p and Argos owner GUS slipped 4.5p to 567p, but Dixons and Boots bucked the trend, up 2.75p at 145.75p and 8p at 582p respectively.
Fears of a supermarket price war, however, knocked grocers, after Tesco and US-owned Asda announced plans to slice the price of a number of everyday items from today.
Rival Sainsbury slid 9.25p to 278p and Safeway fell 3.75p to 205.25p, while Tesco was flat at 723.5p.
