Market Report: Banks suffer from market jitters

BANKING SHARES crashed by more than 3 per cent at one time as the stock market agonised about possible wayward loans, rescues and further provisions.

The near collapse of the Long- Term Capital Management hedge fund is weighing heavily on the sector. Rumours of other funds in difficulties continue to swirl around.

A brief suspension of trading in Paris of the Paribas banking group on hedge fund rumours added to the anxiety. Although the Paribas stories appeared to be misplaced there was widespread nervousness about European and US banks. More downgrading of profit estimates following last week's swinging cuts by BT Alex.Brown was another influence.

Many fear, despite reassuring noises, that the bankers are set to suffer further grief unless there is a remarkable stabilisation of the world's finances. Barclays, which has suffered a pounds 250m Russian provision as well as being involved in the LTCM rescue, led the retreat. The shares, riding at 1.949p in July, slumped a further 62p (after 72p) to 961p, the lowest close for more than a year. National Westminster Bank gave up 37p to 790p and Lloyds TSB 21p to 659p. Bank of Scotland, which accompanied a 14 per cent profits advance with cautious noises about prospects, lost 18p to 561.5p; Royal Bank of Scotland gave up 13p at 670p. HSBC surrendered 45p to 1,102p. The mortgage banks, presumably not involved in any need to make overseas provisions, were more resilient.

The bankers' retreat has gathered pace as the market has braced itself for grim tidings. So far only Barclays has said it has been caught up in any financial miscalculations.

Amvescap, the big US fund manager, has suffered in the LTCM fall-out although it has denied any damage; the shares fell 28.75p to 337.5p.

On the supermarket pitch Safeway, following Charterhouse Tilney's sell advice, had a cut price session, falling 16.5p to 275.75p, its lowest for more than two years. Warburg Dillon Read reduced its profits forecast to pounds 342m from pounds 362m. J Sainsbury and Somerfield gave ground and Tesco, at one time up 12p, had to settle for a 2p gain to 167p.

Transport shares suffered sharp reverses after John Prescott, the Deputy Prime Minister, threatened sweeping changes on under-performing rail companies.

FirstGroup slipped 15.5p to 423p; Go-Ahead 13.5p to 668.5p and Stagecoach 52p to 1,138p. But Railtrack got up even more speed, hitting a new 1,695p peak with a 60p advance, largely on the development of the high speed London link to the Channel Tunnel.

Footsie started with a modest 5.9 points gain reflecting the modest US interest rate reduction. But from then on it was all downhill. At one time the index was off more than 100 points; it closed 44.3 off at 5,064.4.

Supporting shares were also on a ski slope with the mid cap index down 17.8 to 4.544.2 and the small cap 9.3 to 1,986.6. Government stocks, traditional havens at times of stress and strain, were firm.

Cable & Wireless lost most of Tuesday's exuberance, down 23p to 561p, as it disclosed plans to float its Australian associate, Optus.

British Airways was lowered 12p to 360p after CSFB and ABN Amro cut profit estimates. ABN went from pounds 660m to pounds 610m.

Pilkington, the glass maker, was another under the downgrading whip. The shares cracked 0.5p to 57.5p as Dresdner Kleinwort Benson and Schroders reduced their estimates.

Express Dairies, helped along by take over gossip, rose 4p to 138.5p with Charterhouse forecasting sharp profit increases and saying buy. The investment house expects profits to rise from pounds 42.4m to pounds 61m.

Allied Carpets firmed 6p to 73.5p on talk that entrepreneur Luke Johnson was leading the bidding race; the carpet chain admitted it has received approaches. Alchemy Partners, the venture capital fund, is thought to be interested.

Dagenham Motors accelerated 14.5p to 135p as the Ford motor giant and Jardine Matheson said they were considering a bid. They plan to set up a joint car retailing venture in Britain and Dagenham may be part of the set up. Airtours' Irish and US buys lifted the shares 28.5p to 352.5p and Booker, the struggling cash-and- carry chain, continued to strengthen, up 7.5p to 120p, on the new management team.

Blakes Clothing had the distinction of producing a profits warning that pushed its shares higher. They rose 5p to 11.5p after it said profits would be lower than the pounds 700,000 the market had pencilled in. Around pounds 500,000 seems possible, rather better than many of the estimates that had been bandied around.

JKX Oil & Gas, hit by Ukrainian currency restrictions, at one time halved to 5.5p; the shares ended unchanged at 11p. Emerald Energy rose 0.5p to 9.25p with Seaq putting volume at 15.2 million shares. The company is due to provide details of its Colombian drill next week. They are expected to be positive.

SEAQ VOLUME: 962.4m

SEAQ TRADES: 59,124

GILT INDEX: Torday & Carlisle, the engineer, is keeping up the pressure on Meristem, the speciality chemical group. Last month a surprised Meristem disclosed that T&C had emerged as a significant shareholder. There had, it said, been no contact between the two compa nies. T&C has lifted its shareholding to just over 25 per cent of the capital by taking an option on 4 million shares held by a Channel Islands company. A bid looks likely.

EXPECT sweet noises soon from Ritz Music. It is thought to be planning a move from the fringe Ofex share market to a full listing and is contemplating the takeover of a radio station that it will use as a country and western music outlet. Nick Hartley, f ormerly of PolyGram, has become finance director and earlier this year Durlacher became the company's stockbroker. The shares held at 65.5p.

Suggested Topics
Life and Style
tech

Sales of the tablet are set to fall again, say analysts

News
A Brazilian wandering spider
news

World's most lethal spider found under a bunch of bananas

Life and Style
gaming

I Am Bread could actually be a challenging and nuanced title

News
Nigel Farage has backed DJ Mike Read's new Ukip song
i100
PROMOTED VIDEO
Life and Style
tech

Company decides to go for simply scary after criticising other sites for 'creepy and targeted' advertising

Sport
Mario Balotelli pictured in the win over QPR
footballInternet reacts to miss shocker for Liverpool striker
News
news

Footage shot by a passerby shows moment an ill man was carried out of his burning home

Voices
Sol Campbell near his home in Chelsea
voices
News
i100
News
Kimi the fox cub
newsBurberry under fire from animal rights group - and their star, Kimi
News
ebooksAn unforgettable anthology of contemporary reportage
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

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Project Coordinator - 12 month contract

£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...

Day In a Page

Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album
Hugh Bonneville & Peter James: 'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'

How We Met: Hugh Bonneville & Peter James

'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'
Bill Granger recipes: Our chef's heavenly crab dishes don't need hours of preparation

Bill Granger's heavenly crab recipes

Scared off by the strain of shelling a crab? Let a fishmonger do the hard work so you can focus on getting the flavours right
Radamel Falcao: How faith and love drive the Colombian to glory

Radamel Falcao: How faith and love drive the Colombian to glory

After a remarkable conversion from reckless defender to prolific striker, Monaco's ace says he wants to make his loan deal at Old Trafford permanent
Terry Venables: Premier League managers must not be allowed to dictate who plays and who does not play for England

Terry Venables column

Premier League managers must not be allowed to dictate who plays and who does not play for England
The Inside Word: Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past

Michael Calvin's Inside Word

Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past