Although selling was not heavy the stock market was in deep depression yesterday as a succession of wounding rumours took their toll.
It mattered not whether the rumour was true or false. Even if firmly denied, its impact was still felt.
The market started with modest gains. Then it became aware of yet another round of profit downgradings and the rumour clouds gathered.
Isosceles, the unquoted Gateway supermarket chain, was said to have lost the confidence of its bankers. 'Absolute nonsense,' said a spokesman. But the damage had been done. With rumour following rumour, shares were in ragged retreat and the FT-SE share index closed 27.3 points lower at 2,493.9.
Throughout the day worries about the new MFI issue were evident and suggestions that the Telegraph share sale had flopped, confirmed after the close, merely added to the new issue nervousness first highlighted by the abandonment of the GPA flotation.
The lingering recession, with interest rate cuts ruled out by the ERM, weighs heavily on market forecasts. Most strategists have now dropped hopes that Footsie will cross the 3,000 mark this year. Predictions of 2,850 are now the top of the range.
Footsie started the year at 2,493.1. It roared ahead after the election, reaching a 2,737.8 peak before falling below 2,600 only a month ago.
Some of the more abject recent casualties actually resisted the downward tug. British Aerospace, on hopes of a reshaped Euro fighter, rose 4p to 249p and British Petroleum improved 5.5p to 209p. General Electric Co and Granada Group responded to better-than-expected results.
But BM Group was again in the wars. The shares collapsed 28p to 85p on worries about profits and whether contracts arranged by former chairman Roger Shutte can be retained.
The latest retreat occured as Mr Shutte, who quit on Friday because of ill health, said he had purchased 100,000 shares at 110p. His stake is now 870,000, representing 0.8 per cent of the capital.
Before the Shutte bombshell the shares were 314p. A month ago they were 398p.
Amber Day, strong recently on bid hopes, fell 9p to 41p as potential predator In Shops abruptly changed its mind and said it would not bid after all. The bid fiasco started on Monday when In Shops confirmed speculation that it was considering an offer. In Shops rose 6p to 81p.
Ladbroke Group was hit by downgradings. Barclays de Zoete Wedd chopped from pounds 250m to pounds 230m for this year and from pounds 300m to pounds 260m for next.
Chairman Cyril Stein countered by buying 250,000 shares at 200p. The price ended 9p down at 206p. Poor hotel trading is thought to be behind the BZW rethink.
Bass, still reflecting a disappointing US presentation for its Holiday Inn hotel arm, fell a futher 17p to 558p. Forte, hit by rumours that its contract catering sale would not go ahead and it would be forced into a rights issue, was at one time down to 187p. The shares closed at 193p, down 6p.
Building shares were hit by profit revisions. BZW was again to the fore, cutting George Wimpey from pounds 30m to pounds 25m and pounds 50m to pounds 35m. It also reduced dividend expectations. Amec also felt the BZW axe, cut from pounds 45m to pounds 40m and pounds 45m to pounds 35m. Wimpey fell 5p to 139p and Amec 9p to 123p.
Costain Group had an uncomfortable time. A programme trade was said to have done much of the damage, pushing the shares down 10p to 36p. They closed at 40p.
Builder Edmond Holdings slumped 12p to 26p following a warning that profits would be 'substantially' below last year's pounds 1.7m.
Properties were weak, although Greycoat rose 2p to 40p. It has refinanced its Embankment Place development above London's Charing Cross station. Banks have provided a pounds 125m seven-year fixed rate mortgage.
Gresham House, specialising in unquoted investments, was the worst performer, crashing from 18p to 8p. It has revealed an asset deficit of 18p a share.
It was not the best of days for newcomers but Kenwood, placed at 285, went to 290p before closing at 287p. An obscure investment vehicle, the Shanghai Fund, also made its debut. It is thought to be the first trust to invest in quoted Chinese securties - there are currently seven with another ten scheduled. The shares ended at 314p against a 260p opening price.
Shares suffered another mauling yesterday, with the FT-SE share index closing 27.3 points lower at 2,493.9. At one time it was down 33.1 points. The FT 30-share index lost 25 points to 1,917.3. Turnover was not heavy, emerging at only 495.1 million shares with 20,570 bargains registered. Government stocks made headway
Profit upgrades are rare these days. But Barclays de Zoete Wedd tempered a string of cut estimates yesterday with an upward revision for Provident Financial, the door-to-door credit group. The securities house has lifted its projection from pounds 39m to pounds 41.9m for this year. Last year the company produced pounds 34.1m. The shares, however, dipped 1p to 528p.
There are hopes that MS International, the engineering group, will make a sharp recovery this year. It has been hit by settling a legal despute but profits of pounds 251,000 are likely to grow to more than pounds 1m this year. Borrowings have been cut from more than pounds 4m to pounds 782,000 in a year. It is holding its dividend at 2.5p, putting the shares, at 25p, on a 13.5 yield.Reuse content