Japanese quake casts a wide shadow

THE Footsie hit a fresh three-month closing low yesterday, with some sectors viewed as being vulnerable to further falls as the extent of the damage in Japan after the earthquake and tsunamis becomes clearer.

Luxury goods firms such as Burberry and insurers including Aviva and Catlin were among the biggest fallers as Japan faced the economic impact of a disaster that has killed thousands.

But Glasgow-based temporary power supplier Aggreko finished at the top of the risers' board - up 8.2 per cent or 116p at 1,523p - after the firm said it stood ready to supply Japan with emergency generators.

The FTSE 100 index closed down 53.43 points, or 0.9 per cent, at 5,775.24. London's market had held its nerve for most of the day until a late-session sell-off sparked by heavy falls on Wall Street.

The Dow Jones Industrial Average dropped more than 140 points in early trading, while markets across Europe also fell despite a weekend agreement over a package of measures to ease the eurozone debt crisis.

The Footsie has lost almost 200 points in the past four sessions with sentiment weighed down by violence in Libya, euro zone debt worries and Japan.

The pound fought back from near-four month lows against the euro, later standing 0.3 per cent higher at €1.16, and edged 0.6 per cent higher to $1.62.

There were significant losses for some of Japan's leading companies amid fears about the economic impact of Friday's disaster, including power shortages that could disrupt factory output. Car makers were badly hit, with Toyota down 8 per cent.

Oil prices fell on expectations that weaker Japanese economic output will depress demand for crude. The price of Brent crude dropped to about $113 a barrel.

However, the price of liquefied natural gas (LNG) for summer delivery has leapt 7 per cent since Friday to 65p a therm - the highest since October 2008 - as fears mounted that imports to Britain would be hit as cargoes are diverted to stricken Japan following its earthquake and nuclear crisis.

The spectre of higher gas prices saw shares in London energy stocks jump higher, with coal-fired power station operator Drax soaring as much as 7 per cent at one stage. It later closed 12.4p higher at 408.7p, a gain of 3 per cent.

Gas exploration giant BG Group was also higher, up 4 per cent or 54p at 1,514p, as wholesale gas prices rose.

But insurers fell as they began counting the cost of the disaster, with Aviva down 3 per cent or 13.9p at 440p and Catlin 3.2 per cent or 11.1p lower at 338.7p.

Edinburgh-based insurance and pensions group Standard Life fell 5.7p or 2.6 per cent to end the day at 217.5p.

Kevin Ryan, analyst at Investec Securities, said: "The earthquake, tsunami and the aftershocks expected this week are likely to generate one of the largest re-insurance losses seen. If this happens, it will affect insurance and reinsurance pricing and it may affect equity markets."

One trader added: "The market doesn't forget and in 1995 following the Kobe earthquake - a smaller disaster compared to Friday's one - we must remember that the Nikkei lost over 20 per cent. As things stand we've lost nearly 10 per cent."