FTSE plummets to a 12-week low

Published on Monday 18 April 2005 12:36

DEALING screens ran red today after the FTSE-100 index of British blue chips plunged to its lowest level in 12 weeks.

No sector escaped the rout, as the index fell by more than 100 points in early trade before recovering to stand 84 points down at 4807 just before midday.

Earlier, the benchmark hit 4794.8, its lowest intraday level since January 25.

Fears about a spending slowdown and plunging share values in Asia overnight compounded Friday’s collapse on Wall Street.

Every company in the top index showed red, with the exception of ITV - which remained at Friday’s closing level.

Share prices on Wall Street and Asia tumbled as disappointing results from computer maker IBM last week increased investor concerns about an economic slowdown and as disconcerting news from United States carmakers General Motors and Ford hinted at a future consumer spending slowdown.

"What worries people is that looking at the state of the car market, notably in the US, there’s a feeling we’ve had something like four years of zero interest rates to sell cars in America and it no longer seems to be doing the trick," said Dan Bunting, European strategist at Dryden Wealth Management. "Are we reaching that dreaded tipping point?"

Dealers said falling oil prices and a more stable US dollar - factors that should relieve pressure on shares - were overshadowed by fears for the economy.

Anglo-US fund manager Amvescap was the biggest casualty, shedding 4.5 per cent as investors fretted over its heavy dependence on US stock market. Steelmaker Corus lost four per cent amid concerns that demand for steel may have peaked.

Technology-related stocks crowded the list of mid-cap fallers after IBM’s disappointment was compounded by weak earnings from Dutch electronics firm Philips. Telecoms testing equipment maker Spirent, software maker Misys and bluetooth provider CSR each shed around five per cent.

The only blue-chip pure play technology stock, Sage, was among the FTSE-100’s biggest fallers, down four per cent.

Leisure firm William Hill was also among the heaviest casualties, shedding 2.5 per cent after it said it was in talks to buy the betting shops of smaller rival Stanley Leisure for more than 500 million. Shares in mid-cap firm Stanley Leisure, which also operates casinos, jumped almost 11 per cent.

Elsewhere on the merger and acquisition trail, shares in soccer club Manchester United were among the clutch of risers in London, adding 1.6 per cent as investors hoped takeover talks with US financier Malcolm Glazer could conclude this week.