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Hanson expected to drop out of the FT-SE 100

Hanson, darling of 1980s investors and to many a symbol of the age of buccaneering empire building, is likely to be dropped from the FT-SE 100 index of leading stock market companies when the index is next reviewed in two weeks' time.

The company, now a building materials group after the demerger of its Imperial Tobacco and coal and electricity interests, was a founding member of the index when it was constituted in 1984. When it falls out, on 20 September, it will bring the number of original members of the index down to 46.

Its expected departure will not be due to a dramatic fall in its share price, which has recovered 16 per cent since the demerger at the beginning of the year to close at 303.5p on Friday. The need to make room for newly demutualised financial services companies Norwich Union and Woolwich, however, has meant that it will fall into the FT-SE 250 index of second line stocks. Both Norwich and the Woolwich will gain automatic entry to the 100 by virtue of their respective market capitalisations of pounds 6.48bn and pounds 4.68bn.

Hanson has market value of pounds 1.98bn and is second from bottom of the index, just ahead of Tate & Lyle, which with a capitalisation of pounds 1.89bn is also scheduled for the drop.

Stephen Vale of FT-SE International, the joint venture between the Stock Exchange and the Financial Times that administers the index, said Hanson might yet be able to save itself by a sustained rally over the next two weeks that would take it above Imperial Tobacco and consign the Embassy cigarettes-to-Rizla company to the FT-SE 250.

"As it stands, however, the two to drop out will be Tate & Lyle and Hanson," said Mr Vale. Imperial's shares ended the week at 438p, valuing the company at pounds 2.02bn. A matter of pounds 40m separates the two former parts of Lord Hanson's empire, and it will remain a close call until the FT-SE committee meets on 8 September.

The departure of two industrial companies and their replacement by financial services companies is expected to hasten calls for the index to be altered to reflect the fortunes of a broader cross-section of UK business.

The index is already heavily stocked with financial services firms, and its meteoric rise over the summer has been driven by takeover speculation and bumper profits among the leading banks, led by HSBC and Barclays. By the same token, negative sentiment in those stocks has caused the index to record large falls in recent days.

"Financial services are now a very important part of our economy, and the market cannot ignore that," said Mark Brown, equity strategist at ABN Amro Hoare Govett.