Market Report: FTSE falls as trader pushes wrong button

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THE BLUE-chip heavyweight Vodafone Airtouch performed a demolition job on the FTSE 100 yesterday with a roguish trade of gigantic proportions.

The mistaken deal - caused by a typing error by a trader believed to work for US investment bank Lehman Brothers - sent the leading index to its lowest point of the day and reawakened criticism of the electronic trading system.

It all happened at 1:40pm. The poor blue-chip index was already some 75 points down - hit by the surprise rise in interest rates - when it suddenly nosedived for no apparent reason. Less than a minute later, the index was showing a loss of 150 points - its lowest point of the day.

Market watchers immediately pointed the finger at Vodafone. The stock was hovering at around 1,220p when a flurry of below price deals sent it crashing 20 per cent to 1,013p at exactly 1:40pm. With Vodafone accounting for more than 6.4 per cent of the FTSE 100, it was easy to see how the plunge in the mobile phone giant had sent the index reeling.

The market's rumour-mill attributed the slump to a deadly mixture of human error and technical inadequacies.

Chuckling traders said that their Lehman colleague had started the slide by typing the wrong price on the electronic order book, say 1,150p instead of 1,250p. The mistake triggered a wave of 55 below-price deals which savaged the Vodafone share price.

Not every one could see the funny side of it. One trader pointed out that investors selling at the cut-price will not be pleased with their deals. Another one blasted the Exchange's prized order book, which allowed such a farce to take place. "These were rotten deals in a rotten system," he said.

Fortunately, some of the trades were later cancelled and Vodafone ended just 27p down at 1,235p. The real reason for the fall were fears - highlighted by broker SG - that it might be losing mobile subscribers to Orange, 14p higher at 1,088.5p.

As for the FTSE 100, it ended down 55.9 at 6,253.6 as a firm opening in the Dow helped pare the losses caused by the Bank of England's surprise tightening. The undercard did slightly better with the FTSE 250 closing down 29.6 at 6,123.8 and the small cap ending its 17-day winning streak with a 4.4 point drop to 2,854.7.

With the debate over the order book raging, Morrison Supermarkets stole the limelight. The northern chain checked out a 17.5p rise to 169.75p on talk of corporate action. A bid from a European player such as Holland's Ahold was mooted. A merger with troubled Safeway, down 1.75p at 261.25p, is a more remote possibility.

Mining stocks were the unlikely cause of excitement. Rio Tinto drilled an 18.5p rise to 1,173.5p on vague bid talk. Billiton, down 2.25p to 265p despite Merrill Lynch and Deutsche upgrades, has been mentioned as a target. Anglo American, down 47p to 3,460p despite good maiden results, is another potential predator.

The market's fall did not stop Allied Domecq. The drinks group fizzed 9.75p higher to 377.25p on continued talk of an overseas bid. Non-alcoholic rival Cadbury Schweppes sparkled 7.75p higher to 416p on talk of good trading. Insurer Norwich Union, an old bid chestnut, jumped 8.75p to 474.25p on revived takeover talk.

Aerospace engineer Smiths Industries rose 15p to 948p despite being dropped from the FTSE 100 together with bus group Stagecoach, down 2.5p to 207.5p, and publisher Emap, up 4p to 1,060p. The new-found blue-chip status did not help insurer Old Mutual, down 6p to 132.25p, software group Sage, 115p lower to 2,835p, and computer specialist Sema, down 18p at 750p. Securicor locked away a 4.5p rise to 594.5p on returning talk of a bid from Rentokil Initial, 7.75p lower at 252.5p, despite whispers of a cash back. Blue Circle, interims next week, climbed 3.25p to 452.75p on hot talk of a sale of its heating division.

Media groups Granada, 8.5p better to 589p, and United News & Media, 10.5p higher at 640p, were excited by the US merger of CBS and Viacom. However, rival Carlton plummeted 15p to 473.5p after influential broker Goldman Sachs dropped the stock from its recommended list and downgraded it on concerns over OnDigital.

Gas group Centrica, interims today, flared 0.75p higher to 170.25p on talk of a tie-up with telecom group Energis, 30p lower at 1615p. Gallaher, interims today, puffed 4.25p higher to 445p on continued talk of a bid from Philip Morris or Japan Tobacco.

Drug group Medeva confirmed the predicted talk of a cash bid and injected 32.5p into its share price to a year's peak of 164p. Elan, flat at 2,150p, Galen Holdings, 26.5p higher to 576.5p, and US rival Ethical Holdings headed the mooted predators' list.

Biotech group Cortecs soared 5p to 17.5p on talk of a major licensing deal and wilder rumours of a bid. Proteome Sciences, up 1.5p to 14p, and Celltech Chiroscience, 6.5p higher to 479p, completed the sector's glory day.

Computer midcapper FI climbed 18.5p to 392.5p on optimism over tomorrow's annual statement and talk of foreign buys. However, bus group National Express, down 45p to 951p, was rammed by fears over tomorrow's interims. Rehashed bid rumours supported Rugby, up 3.5p to 111p, and glass-maker Pilkington, 3p higher at 115p. Housebuilders crumbled after the rate hike and poor figures from Beazer, 17.5p lower at 171p. Berkeley, 46p down at 731.5p, Wilson Connolly, 9p lower at 177.5p, and Persimmon, 10.5p worse at 259.5p, completed the rout. However, tiny Faribriar rose 8p to 72.5p after winning permission for a London project.

AB Ports sunk 21p to 319p after disappointing numbers, while supermarket chain Somerfield plunged 14p to 209p on fears over trading and lack of merger partners. Software superstock Baltimore surged 125p to 1197.5p. Monday's interims could bring new deals with banks. Ofex minnow Ashpool Telecom firmed 3p to 62.5p after launching a voice-based e-mail system.



SEAQ GILTS: 104.35 -1.10

TAYLOR NELSON SOFRES, down 1p to 181.5p, is on the acquisition trail. The market information group could soon announce the takeover of WHF, the largest independent mystery shopper specialist in the UK. The company, which last year had sales of pounds 1.4m, has a database of more than 15,000 people who act as cloak-and-dagger "assessors" of a shop's performance. It also specialises in the use of hidden cameras to monitor customer service.

THE FUTURISTIC company Newlands Scientific debuted on the junior Ofex market yesterday with a 5.5p rise to 35.5p.

The Hull-based minnow deals in a substance called Terfenol. The material expands and contracts according to the proximity of a magnetic field. Its unique properties mean that Terfenol can be used to move large loads and to help complex instruments to generate inch-perfect movements.