This week's detergent price cuts by the US giant Procter & Gamble have again concentrated minds on the increasingly competitive environment manufacturers are facing and the growing danger that profit margins will be squeezed unmercifully.
Since the Procter move became known on Tuesday the shares of Unilever, its main rival, have fallen 49p to 953p.
There is a strong view that the market has over-reacted and Procter is merely trying to catch up with Unilever, which has stolen a march on its rivals in the US with a new detergent.
But, even if it is a question of Procter fighting back, the Anglo- Dutch giant faces a stronger challenge in the US. More worrying is the possibility that Procter's new aggression will be extended to the UK and Europe, where Unilever is much more entrenched. The US company is due to meet analysts today.
In April, Philip Morris reduced some of its cigarette prices, including the top-selling Marlboro. Since then the shares of BAT Industries, one of its main US rivals, have been under intense pressure, falling from around 500p to 418p, up 2p.
BAT has warned that the US price war could cost its Brown & Williamson offshoot dollars 75m in the first half of this year.
Fears that the brand battle will intensify hit a variety of shares, including Cadbury Schweppes, down 9p at 439p, Grand Metropolitan, 6p at 409p, Guinness, 13p at 454p, and Reckitt & Colman, 20p at 551p.
Media shares, already suffering from the tabloid price war, suffered further discomfort as stories circulated that VAT will be imposed on newspapers and magazines.
Daily Mail Trust lost 250p to pounds 96.5, Emap 5p to 347p, Mirror Group Newspapers 3p to 148p, Pearson 18p to 442p, The Telegraph 5p to 388p and United Newspapers, where rights issue worries persist, 5p to 516p. The nil paid United rights lost 7p to 34p.
Food retailers were also hit, with a leading investment house, thought to be UBS Securities, cutting its profit forecasts across the board. Rumours that Hoare Govett was about to downgrade Tesco added to the gloom. Tesco fell 5.5p to 201.5p, Kwik Save 8p to 684p and Iceland 9p to 216p.
UBS also inflicted gloom on electricities, suggesting profits should be taken. Its comments left National Power 9p down at 349p, PowerGen 10p off at 371p and Yorkshire Electric 8p lower at 529p.
Against such a deluge of negative advice the FT-SE 100 index did well to restrict its loss to 4.8 points at 2,832.3, with another set of impressive inflation figures helping sentiment.
Government stocks, however, were the main inflation beneficiaries, scoring gains of up to pounds 1.
Among equities financials edged forward although Abbey National, the subject of bearish comment this week, was ruffled by brisk trading, including a 7 million agency cross. The shares fell 5p to 409p.
Standard Chartered jumped 23p to 827p, Prudential Corporation was helped by American interest and the composite insurers continued to reflect relief about their limited exposure to the US flood disaster.
Great Universal Stores again attracted attention as the market indulged in the enfranchisement guessing game that regularly proceeds its results, due today. The ritual pushed the price of the voting shares 138p higher to 3,338p. They have climbed 238p in the account that ends tomorrow. The 'A' improved 12p to 1,765p.
Through its holding in the voting shares - there are only 5.42 million issued - the Wolfson family dominates the asset-rich company, thought to have a pounds 1.2bn cash pile. The shareholders of the 241.64 million 'A' shares do not muster a solitary vote between them.
The GUS results are expected to show a modest gain to pounds 465m. This year's figure is forecast to come out at around pounds 495m.
Glaxo Holdings suffered a Lehman downgrading, falling 3p to 553p. SmithKline Beecham held at 424p. There are indications it could be the mystery bidder for Medco, a US mail order medical group with sales of dollars 2bn and a market capitalisation of dollars 5bn. Amersham International, meeting analysts, shaded 6p to 830p.
BT held at 410.5p with the BT3 public offer oversubscribed. Institutions were said to be bidding up to 162p for new shares.
British Steel put on 3.5p to 100p, with SG Warburg positive. RTZ dipped 10p to 670p on the falling copper price and worries that strikes could hit production.
Tiphook's plunge into losses pushed the shares 35p lower but bear closing cut the fall to 27p at 259p. Burton Group slipped 1.5p to 81p. Smith New Court was said to have downgraded from pounds 45m to pounds 35m and from pounds 90m to pounds 80m.
Court Cavendish, the nursing homes newcomer, had another poor session, falling 9p to 198p. The shares are 27p below the issue price.
Aviva Petroleum rose 9p to 82p. Approaching 5 million shares were traded, with some suggesting that the controversial Graham Ferguson- Lacey was behind the selling. Europa Minerals gained 5p to 37p on retructuring moves.
Vistec, a computer software group, was unchanged at 30p after the chief executive, David Wallis, sold 350,000 shares through Henry Cooke Lumsden.
The FT-SE 100 index closed 4.8 points down at 2,832.3 and the FT-SE 250 index lost 7.5 points to 3,222.5. Turnover was 612.7 million shares with 24,453 bargains logged. The account ends tomorrow with settlement on 26 July
Burndene Investments, the caravan and hosiery group, edged ahead 2p to 52p as Paulo Trust, a long-standing shareholder, sold most of its stake. It is thought Hoare Govett placed 4 million shares (about 4 per cent) with institutions at 50.5p. Early this year Burndene sharply improved the marketability of its shares by producing an imaginative 10-for-1 scrip issue.
Builder Crest Nicholson fell 3p to 59p after a court ruled it had wrongfully refused to complete a land purchase at Reading, Berkshire, in 1988. Total cost of the judgment will be about pounds 2m although Crest will not have to acquire the land. In its latest financial year Crest made profits of pounds 2m and the market expects a similar performance this year. Next year some are looking for pounds 6m.Reuse content