Market Report: Bad news from big players weighs heavily

BIG write-offs and provisions made by two of the UK's leading companies weighed heavily on the market's shoulders yesterday, depressing prices and leaving the account, which ends today, in the black by only the slimmest of margins.

Share prices dropped sharply in morning dealings as Sir John Quinton, chairman of Barclays, announced pounds 1bn of bad debt provisions and warned that the recession could last another two years.

Barclays, though, was one of only a handful of Footsie stocks to escape the morning carnage. Analysts took heart from the company's operating performance and the general view that the bank had provided for everything down to the kitchen sink.

National Westminster dropped 6p to 315p, as investors switched to Barclays, 10p better at 334p. Some 15 million Barclays were traded, and 5 million NatWest.

The FT-SE 100-share index slumped by more than 25 points following Barclays' results. There was only a brief respite as the market waited for BP to wade in with more bad news shortly after 11.30am.

The index then dropped to 32 points down as the oil giant announced write-offs of pounds 900m and a halved interim payment. Although the figures were widely expected, the news still flushed out some sellers and pushed BP down by 17p at one stage.

Trading in BP, which closed 10p off at 196.5p, was very heavy at 68 million. Shell also announced results, but while they were considerably healthier than BP's, they were at the bottom end of expectations. Shell lost 4p to 461p.

The level of trading in BP was not indicative of the rest of the market. Total turnover was below 500 million, and included volume of 43 million in BET's unwanted rights stock.

Only 43 per cent of BET's rights was taken up, but the shares held steady at 110p with the result not as bad as feared. The rump was placed at 107.5p.

Generally, the market continued to worry about interest rates although the tension was eased slighty by the Bundesbank's decision to hold steady.

The Germans' stance, though, calmed currency markets and helped equities to halve losses in the afternoon session.

The FT-SE eventually closed 15.2 points down at 2,377.6, compared with the account's opening level of 2,377.2.

No benefit was felt, however, in the building and property sectors, where talk about more corporate casualties resurfaced. Losses extended to double figures, and lows were again recorded in several stocks.

Among the lows in building materials were Redland, down 15p to 415p, RMC, off 4p to 471p, and Pilkington, 1p easier at 86p.

In construction, MJ Gleeson hit a bottom for 1992 with an 18p decline to 640p, as did John Mowlem, down 3p to 68p, Wilson Bowden, off 3p to 258p, and Wilson Connolly, which shed 8p to 117p.

Adverse thoughts about the housing market also unsettled the composite insurers, which are due to start reporting results next week. Investors are becoming a little jittery about the possibility of further deterioration in the composites' mortgage indemnity business.

Royal Insurance suffered more than most yesterday, losing 7p to 184p. Sun Alliance slipped 2p to 258p, General Accident gave up 5p to 385p, as did GRE to 116p, while Commercial Union fell 11p to 435p.

Elsewhere, Cable & Wireless was knocked down 16p to 524p on rumours that its planned link with US West was in danger of collapse. The rumours subsided as the company said talks were continuing.

Some 2 million Cable were traded, amid talk that some investors were switching to Vodafone, up 7p to 327p with 4.6 million traded.

Thorn EMI caught a cold from the disastrous figures from Philips. The price slid 32p to 711p, uncomfortably close to the year's low of 707p. There were reports of imminent downgradings by at least one broking house.

Gloom continued to overhang the leisure sector. Forte lost 3p to 139p, and Granada fell 5p to 246p. Granada dismissed suggestions that it would be hurt by the Government's decision to relax regulations governing the number of motorway service stations.

On a brighter note, BOC pleased with a rise in third-quarter profits and rose 17p to 601p.

Water companies continued to shrug off recent adverse comments about the industry. Anglian climbed 12p to 406p, and Thames put on 6p to 413p.

Wessex firmed 1p to 485p, on reports it was close to buying Econowaste, a landfill site operation, from Tarmac, up 2p to 63p.

Share prices recorded heavy falls in early dealings, but rallied later in the day as the market's fears over interest rates were calmed by the Bundesbank's decision not to lift its Lombard rate. The FT-SE 100 share index, down by 32 points at one stage, closed 15.2 lower at 2,377.6. The narrower FT 30 fell 17.3 points to 1,774.2.

Robert Fleming seems to have been using the Wellcome 'green shoe' price stabilisation mechanism. It appears it bought 9 million Wellcome last week, judging by a notification yesterday. It holds 52.3 million, of which 40.5 million were believed to be the allocation for the green shoe, 10 million borrowed and 9 million bought since the shares were allocated on 27 July at 800p.

It is not just Gibbs Mew, the Wiltshire brewer, that fascinates the Kiwi investor Sir Ron Brierley. He has also taken a shine to Budgens, the grocer. In March his BIL Securities lifted its holding to 24.1 per cent. In May he added another 1.5 per cent. Yesterday he lifted his stake to 26.3 per cent. The disclosure came after hours, with Budgens steady at 35p.