Market report: Footsie takes retailers' warnings to heart

A RAFT of profit warnings weighed heavily on an already hesitant stock market. Footsie, at one time down more than 100 points, ended 74.6 off at 5,733.1. A weak New York opening and the inevitable worries about the outcome of the Monetary Policy Committee meeting increased the uncertainty.

The power groups were among the worst hit. National Power's implied profit warning continued to generate profit downgradings. NP fell 32p to 555p and PowerGen dimmed 43p to 760p. Since Tuesday's cautious comments NP has fallen 63p and PG 72p.

After the power blip the market was ill-prepared for three retail warnings. The comments from MFI Furniture, DFS Furniture and Carpetright, nicely timed to catch the MPC's interest rate deliberations, caused sharp mark downs among the retailing community.

MFI fell 30p to 98p; DFS 124p to 463.5p and Carpetright 74p to 422,5p. Their chorus of caution was picked up by the likes of Dixons, down 31p at 514p, and JJB Sports, 25p at 797.5p.

Next, however, highlighted the collapse. The shares fell 61p to 734p. Besides the suddenly more unfriendly high street climate, they had to contend with the continuing dismay that the long-expected takeover by Great Universal Stores was now unlikely to materialise.

Not only has GUS got its corporate hands full with its bid for Argos but Lord Wolfson of Sunningdale, chairman of both GUS and Next, has decided to step down from the Next chair. Cautious noises from Dresdner Kleinwort Benson also contributed to the fall.

Other retailers lower included Allied Carpets, Kingfisher and Marks & Spencer.

Tesco was one to notch a gain, 1.5p to 517.5p. Nikko, the Japanese investment house, rates the shares a sell. Estimated earnings growth does not support the share rating, it says.

The profit uncertainty was also evident in other areas. Vickers, the engineer striving to sell its Rolls-Royce cars division, was downbeat about this year's prospects; BICC, the cable and construction group where takeover rumours have swirled, lost 8p to 138.5p on a cut dividend.

High-flying hand-held computer maker Psion tumbled 91.5p to 328p after offering a decidedly low key trading statement and a 29 per cent profits fall; Meconic, a chemical group, plunged 76p to 277.5p, saying profits would be "considerably below" last year's pounds 8.2m. Microgen, an IT group, fell 11p to 57.5p; it also said profits would be below expectations.

Still, the barrage of bearish comments failed to dim the SmallCap index, which moved to yet another peak. The mid cap index fell only 12.7 to 5,268.7.

Powderject, a biotech group, helped the SmallCap advance, scoring a 104p gain to 418.5p. A licensing agreement with the Glaxo Wellcome giant was responsible. The deal, which could produce $300m of fees, was seen as a big vote of confidence in Powerject's technology. Magnum Power, once 178.5p, was another small cap enjoying a run, up 5.25p to 14.5p on talk a cash injection was near.

Among mid caps Telewest Communications put on 6p to 83.5p on bid hopes; Cookson rose 13.5p to 240p and Associated British Ports, 18.5p to 340.5p on results.

Micro Focus, the computer group, jumped 285p to 3,487.5p following profits and suggestions corporate activity was being prepared.

Mirror Group, year's figures next week, rose 8p to 179p on reports it is in talks with Ireland's Independent Newspapers which could lead to one of the groups selling its 46 per cent shareholding in Newspaper Publishing, publisher of The Independent, to the other.

David S Smith, the packaging group, gained 4.5p to 215p on suggestions profit upgrades are being prepared. Arjo Wiggins Appleton hardened 10p to 186.5p.

Halifax, off 27p at 925p, continued to register disappointment with its share buy-back.

Vodafone, where there was some vague talk of corporate activity, fell 16p to 536p ahead of today's Oftel review of mobile telephones. Orange was also hit, down 22p to 325p.

Building material shares remain in demand on expectations of improved trading and take over action. Hepworth put on another 6.5p to 233p and RMC was up 40p at 970p.

Faber Prest, the distributor, gained 31.5p to 494p as a 500p-a-share US bid appeared.

Springwood, the leisure group run by Adam Page, ex-Midsummer Leisure, gained 12p to 108.5p. Stockbroker Charles Stanley believes last year's 80 per cent profits increase to pounds 1.33m will be followed this year by an advance to pounds 2.3m, with pounds 4m in sight next year.