Market Report: Shares rocked by worries over US economy

Worries about a sharper than anticipated slowdown in the US economy hit stocks on both side of the Atlantic yesterday. The FTSE 100 dropped 1.3 per cent, or 74 points, to 5,822, as investors were unnerved by yet more evidence that the world's largest economy may be foundering.

KB Home, one of America's biggest housebuilders, warned that conditions in the country's all important housing market remain tough. This came hot on the heels of Thursday's news that the Federal Reserve Bank of Philadelphia had seen business conditions fall in September to their weakest level since April 2003, sparking fears that the US economy is losing momentum faster than most economist thought.

In London, only two blue-chip stocks finished the session in positive territory and both were buoyed by bid rumours. Brambles Industries, 11.5p better to 468.5p, was said to be about to get a 600p-a-share takeover offer, while Hanson, 4.5p stronger to 680.5p, was talked of as vulnerable to an 800p bid from Mexico's Cemex.

The mining sector registered some of the worst losses. BHP Billiton dropped 29p to 887p, Anglo American lost 61p to 2,134p, Xstrata retreated 59p to 2,113p and Rio Tinto gave up 61p to 2,407p

ITV fell 2p to 97p amid growing fears about the outlook for the advertising market. There are predictions that its revenues could be down by as much as 18 per cent in the third quarter of this year and may deteriorate even further in the fourth quarter. That would be disastrous for ITV and mean the much-hyped revamp of its programming schedule has failed.

In recent days, dealers have reported a growing bear position in the stock. A number of New York-based hedge funds are said to be short of ITV shares in the belief that when a successor to chief executive Charles Allen is named it will disappoint the City. At present, Mike Clasper, the former chief executive of BAA, is tipped as the favourite to take the helm of the group followed by Stephen Carter, the retiring boss of telecoms regulator Ofcom.

Although ITV shares trade within a whisker of their all-time low, City sources said it is unlikely that a private equity bid will emerge for the group unless the stock falls a lot further.

Kesa Electricals rose a further 3.75p to 331p amid continued rumours of a bid for Metro, the German retailer. However, Commerzbank poured cold water on the speculation. The broker said: "We would consider it a big setback for the consumer electronics division of Metro if they were to bid for Kesa. The profile of the various banners of Kesa is so different that in our view it would be difficult to justify such a deal." Commerzbank argued that the only UK consumer electronics chain that might fit Metro's portfolio is PC World, which is owned by DSG International. "We cannot find any merits [for Metro] in a Kesa acquisition at all," concluded the broker.

St Ives dropped 2.75p to 219.25p amid cautious comments from Numis Securities about the prospects of the magazine printer being taken over. On Thursday, St Ives shares jumped nearly 6 per cent as management buyout rumours circled dealing rooms. However, Numis believes that the risk faced by anyone buying the company outweighs the rewards. It points out that this year's results will see the group post its lowest earnings for a number of years. Meanwhile, its borrowings look set to rise as it jacks up capital expenditure. For the year to 29 July 2006, Numis forecasts a pre-tax profit of around £21m from St Ives, down from £38m in 2005.

At the small cap end of the market, Thus shed 5.25p to 132p as negative sentiment gained momentum on the back of an Investec note published earlier this week. The broker reiterated its "reduce" rating on the stock, with a 115p price target, and said it was concerned about the company's underlying earnings forecast for this year and the stock's premium rating to sector peers such as Colt and Kingston Communications. Investec was replaced as broker to the company two months ago.

At Monterrico Metals, off 1.5p to 181.5p, Frederick Haller, a non-executive, bought 10,000 shares at 167p, taking his total holding to 1.06 million or 4 per cent.

Richard Ralph, Monterrico's executive chairman, was reported as saying that the group is in talks with 19 parties interested in participating in its Rio Blanco copper project. The miner hopes to bring in one of them to help develop the Peruvian prospect.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before