Market Report: Traders blame the tumbling Dow

FOOTSIE yesterday saw all of this year's gains wiped out by the latest downhill swoop of its recent roller-coaster ride. All the hard work and long hours put in by City traders since New Year's Day was swept away in a sea of red.

As with other recent debacles, Square Mile traders declined to accept any responsibility, pointing their fingers at Wall Street. "It was the Dow wot done it," they said, blaming another large opening loss in the US as the trigger for the fall. The result was a 117.1-point deficit which left Footsie at 5,118.7, just below its 5,135 start-of-year level. The second liners were also battered, with the mid-cap ending 63.2 lower at 4,648.8 and the small cap losing 13.1 to 2,068.2

Enterprise Oil typified Footsie's plight. The oil exploration and production outfit lost 12.1 per cent to close at 325p after it reported that first- half net income had been savaged by the low crude oil price. The results reawakened fears of a massive dividend cut at the full-year stage. More importantly, yesterday's fall in market value will ensure an end to Enterprise's chequered life on the Footsie. Ejection from the blue-chip index at next week FTSE meeting is now certain. Enterprise's figures put a dampener on other oil stocks, with Premier Oil losing 6.5 per cent to 25p and Lasmo down 5p to 154p. Shell was also down 5p to 330p despite confirmation of the oil giant's much-rumoured link of its downstream operations with rival Texaco.

Worries about exposure to Russia's crumbling financial system continue to haunt the banks. Barclays, the only one to come clean so far with a bigger-than-expected Russian provision, lost 89p to 1,194. Its high-street rivals, still to inform the market on the scale of their involvement with Moscow, were also under pressure. Lloyds TSB posted a 54p deficit to 657p, while NatWest Bank fell 59p to 941p and Royal Bank of Scotland settled 42p lower to 845p. Schroders, the City merchant bank, was also among the Footsie's biggest losers, sliding 155p to 1,251p with dealers whispering about concern over its Asian exposure and general jitters about the forthcoming results.

The financial sector was spared a complete rout by Cattles. The door- to-door lender, usually considered the high street banks' poor relation, was one of the mid cap's better performers, rising 27.5p to 563.5p after a glittering set of interims.

Supermarkets were prominent among the handful of Footsie risers. They were boosted by their traditional defensive qualities and by a set of broadly encouraging trading figures. Safeway was the second-biggest climber in the blue-chip charts, rising 11p to 333p on the back of a good year- on-year increase in sales. Asda, its one-time suitor, rose 2.75p to 187.5p. Some City types seem convinced that a tie-up between these two could still happen and could be made easier by their subdued share prices. Morrison Supermarkets, the northern chain, benefited from the trend and closed 3.9 per cent higher at 270p. Sainsbury, down 9.5p to 524p, and Tesco, down 6.5p to 173.5p, did not join in the food bonanza as the market took a dim view of their trading numbers.

Reed International, the Anglo-Dutch publishing giant, topped the list of Footsie risers as brokers warmed to its safe-haven status and deemed that the recent sell-off had gone too far. Their advice pushed the stock up 36.5p to 470p. Granada received a similar treatment, rebounding after some lean months. The media-to-hotels conglomerate continued Wednesday's positive run and rose a further 3 per cent to 802p.

But Granada was one of the few bright spots among media stocks: the sector is still reeling from Wednesday's warning of fading advertising revenue from Maiden, the posters group. Maiden itself rebounded 57.5p to 270p, but yesterday's victim was Newsquest. Fears of an advertisers' flight from its regional newspapers sent the shares down almost 10 per cent to 225p, the worst performance on the mid cap. EMAP, the magazine publisher, followed suit, shedding 45p to 895p. Daily Mail & General Trust was another of the unwanted paper giants. The uncertainty surrounding the company after the death of the charismatic Lord Rothermere pushed it down 182p to 2,218p.

The good news of the day came from just a few results. Amec, the building group, engineered a 10p rise to 149p after a 20 per cent hike in dividend and a bullish trading statement. Amec's optimism dragged up housebuilder Wimpey, up 3p to 103p, building materials stalwarts Hanson, up 9p to 314p, and Hewden Stuart, up 3p to 130p. Man ED&F, the asset-brokerage-to alcohol conglomerate, put on a spirited 16.5p to 320p after telling investors of a strong start of the year.

Marchpole, a licensee for Yves Saint-Laurent clothes, took a very uncool pasting. The shares of the recently-floated minnow halved to 18.5p after a bearish trading update and poor interim profits.

Mayborn, the maker of the Tommee Tippee range of baby products, suffered a similar fate, plunging 28 per cent to 65p after issuing a profits warning.

SEAQ VOLUME: 850.9m

SEAQ TRADES: 57,864

GILTS INDEX: 108.20 +0.39

Nigel Wray, the property tycoon, yesterday made around pounds 9.2m from the sale of 10m shares in Burford Holdings, the real estate group he chairs. Shares in Burford, which owns the Trocadero amusement arcade in London, rose 1p to 95p. Mr Wray said he will use the money to invest in his other interests. The announcement will delight Nottingham Forest football club fans, where Mr Wray invests. Some money for new players could be on the way.

Vanguard Medica rose 40p to 270p. The biotech group is about to sign a multi-million pound deal with pharmaceutical giant, to be chosen from Novartis, Roche, Johnson & Johnson and Bristol Myers Squibb, to market an anti-migraine drug.

Silk Industries plunged 22 per cent to 63.5p after the weaving company warned that interim profits would be below last year's pounds 1.1m.

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