The emerging problems at Glaxo Holdings and Guinness were too much for an already fragile market, and leading shares failed to sustain early strength with the index ending 15.5 points down at 2,757.9.
Glaxo fell 13p to 723p, Guinness 21p to 473p.
The drug sector has been under intense pressure as worries have surfaced about health care cutbacks at home and overseas, particularly in the lucrative US market following the election of Bill Clinton as president.
Reports suggesting that Californian doctors had removed Zantac, Glaxo's highly profitable ulcer drug, from their prescription lists for the poor did the damage. If, ran the story, the suspected move was followed by other states Glaxo's US profits would be devastated.
Guinness was rocked by the latest profit warning from its French associate, LVMH, and an expensive Scotch whisky restructuring. Worries that the tender relationship with LVMH could be in for a period of strain also tortured the market.
On the surface the market had another busy day, with share turnover reaching 666.4 million. But once again much of the action was down among the tiddlers as speculators continued to pursue penny shares, often on recovery hopes.
The suspension of Expedier, ahead of an acquisition, and Lightship, on possible US developments, merely whetted the appetite of the punters.
The rest of the market remained bedevilled by worries about tax changes and rights issues.
Unilever was again weak, with cash call uncertainty mingling with suggestions that the shares will underperform over the next two years. The price lost 18p to 1,051p. The shares have fallen 64p since the account started.
The debacle at British Airways left the shares 6p down at 268p. Rolls-Royce fell 6p to 108p. Carr Kitcat & Aitken expects the final dividend to be cut but regards the shares as a long-term buy.
Lloyds Bank had a difficult session, falling 12p to 506p. Bad debt worries were one influence, another was that old rumour of a bid for TSB Group, down 2.5p to 149p.
Takeover hopes helped Lucas Industries 6p higher to 144p in sometimes brisk trading, APV, up 1.5p to 117p, also felt the impact of bid speculation.
Manchester United, one of the market's three football clubs, continued to reflect its elevation to top spot in the Premier League. The shares rose a further 5p to 349p. They were floated in the summer of 1991 at 385p.
Reckitt & Colman enjoyed a modest boost from James Capel, which drew attention to its overseas earnings. The shares rose 4p to 642p. Smith New Court, however, was much less enthusiastic.
Booker, the food group, slipped to 413p as S G Warburg said take profits and Ladbroke Group, the betting and hotels business, fell 4p to 189p although Barclays de Zoete Wedd took the view the dividend will be held.
There was heavy trading in BT ordinary and partly paid, with SNC said to be switching between the two shares. The ordinary - Seaq put volume at 36 million - rose 2p to 390p. The partly paid, volume 35 million, gained 2p to 285p.
Amstrad, the controversial computer group, held at 23p as the Canadian investment group Peter Cundill lifted its shareholding to 4.06 per cent by buying 2.8 million shares.
Spring Ram, the bathroom group, slipped 3.5p to 112.5p. Abu Dhabi Investment Authority now has 3.1 per cent after picking up a further one million shares.
Weak copper prices were said to be responsible for a 20p fall to 648p by the RTZ mining group.
BPB Industries dipped 13p to 187p. Its arch-rival, the German Knauf group, is said to be extending its Kent factory to produce bagged plaster.
There was some debate whether the move will have much impact on BPB, but with the UK group involved in a bruising price war with Knauf and the French Lafarge group any suggestion of increased competition was bound to damage the shares.
Trio Holdings, the moneybroker, made a firm return, opening at 67p and closing at 64p. The suspension price was 55p.
Steel stockholder Ash & Lacy rose 11p to 163p on a rumoured share deal outside the market and Burdene Investments, on yet another impressive profit performance and a bonus share issue, jumped 110p to 355p.
Dalepak Food slumped 66p to 317p on the profit warning.
Shares of GWR, the commercial radio group based in Bristol, rose 12p to 310p yesterday on suggestions that Thames TV had sold its 9.5 per cent holding. Buyers are two fund management groups, John Carrington and Perpetual. They are the first institutional investors to take a significant stake in GWR. Thames, which lost its TV franchise, held at 159p.
Blenheim Group, the exhibition organiser that has grown rapidly in recent years, is intent on further European expansion. It is hoping to buy exhibition operations in Austria, Sweden and Spain. In the 16 months to end- December Blenheim is expected to achieve profits of pounds 48.5m, with pounds 48m pencilled in for this year. The shares rose 2p to 530p yesterday.Reuse content