Market Report: Footsie has another turbulent session

FOOTSIE SUFFERED another sharp slide yesterday, although the sea of red which threatened to drown the leading index after Monday's slump in the Dow turned out to be no more than a large pond.

After a morning of heavy losses driven by Wall Street's overnight fall and continued uncertainty on Russia's fate, Footsie regained some of its composure in the afternoon helped by a rebound in New York and a flight to quality by domestic institutions. At the end of a volatile session the blue-chip index looked down but not out, closing 80.3 points off at 5,169.1, after having been as much as 173.1 points lower.

Market watchers were relieved that the index had defied the gloomy predictions of the morning, but pointed out that the recent rout has put Footsie within a whisker of losing all the gains made in the year. The second-liners fared even worse, with the FTSE-250 closing at a year low of 4,627.3 after shedding 158.9 points, and the small cap hitting its all-time bottom at 2,047.4, a loss of 78.7 points.

Information technology and telecoms stocks, the bright stars of the recent bull market, took a pasting as traders took a dim view of their soaraway ratings. Orange took the biggest tumble in the Footsie, shedding 13.7 per cent to 612.5p. Fellow mobile phone operator Vodafone was not far behind, plunging 11 per cent to 741p, while Colt Telecommunications suffered a setback in its bid to enter the blue-chip index, with the shares losing 460p to close at 2,110p.

Among IT stalwarts, Misys added another chapter to its topsy-turvey trading history in the Footsie by losing 346p to 2,304p. Mid-cap IT stocks were also savaged, with ARM Holdings shedding 15.5 per cent to 177.5p, FI Group down 12.9 per cent to 1,462p and Sage 157.5p lower at 1,137p. Admiral, down 120p at 960p and Micro Focus, down 40p at 325p, also fell out of favour, while London Bridge, down 25 per cent to 900p showed that not even smaller stocks were immune from the IT bloodbath.

Banks were also on the receiving end of some selling. Barclays lost 78p after it surprised the market with a higher-than-expected Russian provision, while Alliance & Leicester shed 84p as the Stock Exchange moved to rectify a rogue trade on Friday which had marked the stocks down.

The list of blue-chip risers read like a handbook of defensive stocks. Marks & Spencer, a traditional haven in times of crisis, was in demand, rising 26p to 541p, as Panmure Gordon went positive on general stores. The recommendation also helped Kingfisher and Boots. The owner of the do-it-yourself chain B&Q rose 28.25p to 518.25p, while the chemists business posted a healthy 38p rise to 1,031p.

Food retailers were in evidence as investors scrambled for safe havens. Asda topped the FTSE risers, putting on 7.44 per cent to 180.5p as HSBC advised clients to go overweight in food. Sainsbury was also in demand rising 17.5p to 532.5, and Tesco followed suit with a 5p rise to 173p.

GEC benefited from a lower pound and a "long-term buy" advice from Merrill Lynch to soar 6 per cent to 416p. Shell was one of the few blue-chips to rise on the back of old-fashioned takeover speculation rather than dealers' desire to shelter their books from a stock market collapse; the oil giant put on 3.4 per cent as the rumours of a tie-up with rival Texaco grew louder and louder.

Persimmon, the housebuilder, was also blissfully ignorant of global events, rising 4.6 per cent to 146p after a good set of results and an upbeat trading outlook. Scottish Hydro-Electric came up with an electrifying performance, putting on 12p to 564.5p, after announcing an all-share merger with rival utility Southern Electric. Shares in Southern lost 2p, ending at 558.5p. Other utilities put on good showing, with PowerGen rising 17.5p to 756.5p as traders warmed to its defensive qualities, and Scottish Power up 20.5p to 598p amid continuing speculation that it might bid for parts of Racal.

Among the small-caps risers, Rubicon Group, the electrical engineering company, leaped 41 per cent to 225p after agreeing to a pounds 207m bid from the US group Applied Power.

Calderburn, a maker of office furniture and dealing rooms' desks, rose 8.7 per cent to 44p as better-than-expected interim results prompted brokers to upgrade their forecasts.

Crestacare, the nursing homes operator, soared 5p after revealing that talks with a mystery bidder could lead to a 40p-a-share offer for the company.

Shield Diagnostics revelled in a 7.9 per cent rise to 512.5p after the US authorities approved its heart-attack test.

The battle for Dennis, the bus builder, took another twist as Mayflower, which is fighting Henlys for control, revealed it held 4.9 per cent of Dennis. Mayflower's shares fell 6.5p to 159.5p after the company announced it had bought a German car-parts maker for pounds 10.4m. Dennis shares lost 9p to 456p, while Henlys slid 8p to 229p.

SEAQ VOLUME: 800.8 million

SEAQ TRADES: 81,202

GILT INDEX: n/a