Market Report: Uncertainty keeps Footsie on the slide

SHARES suffered another battering yesterday, with the FT-SE share index at one time sinking to a year's low.

All the interest rate and recessionary worries that dominated Friday's session were again evident. In tense trading, prices were in retreat from the first trade, and at lunchtime the FT- SE share index was nursing a 64.8-point fall at 2,367.1.

But a few modest buyers materialised, and with the central banks endeavouring to instil a little confidence into world markets by making a combined effort to support the ailing US dollar Footsie's decline was cut to 28.2 by the close.

Even so, in two trading days the index has fallen 79.7. Yet trading volume has remained derisory, demonstrating that there has been little selling pressure.

But the stock market hates uncertainty, and that is one commodity not in short supply.

Government stocks have become the haven for institutional cash. The latest Minet Confidence Index confirms that big investors have been running down their cash piles but ignoring the call of equities.

Institutional cash is at its lowest for 10 years. And most of the funds monitored by Minet reduced their cash holdings in the second quarter of this year.

Ian Chalmers, who compiles the index, said: 'UK institutions are reluctant to sell equities on an average yield of 5 per cent, but they have been going into gilts because they feel the returns will be closer to equity returns than in the past - and more certain.'

As if to underline the jittery state of the market Caledonia Investments, the cash-rich Cayzer family company, announced that its offer to buy back 9.22 million shares at 355p had been over-subscribed nearly four times and had been scaled down. The shares held at 349p.

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The market yesterday had to contend with a gloomy retail survey by the Confederation of British Industry and indications that the Alliance & Leicester building society will this week follow Cheltenham & Gloucester and push up its mortgage rates.

Even the normally reliable utilities felt the chill winds of uncertainty although they, with the rest of the market, were off their worst by the close.

But the builders, with more downgradings flowing through, were again in despair. Taylor Woodrow was at one time dumped to 57p. The shares closed at 60p, down 3p.

Northern Foods continued to feel the impact of Friday's Hoare Govett caution, falling 19p to 584p.

Cadbury Schweppes melted 14p to 475p as some prepared themselves for a significant Continental acquisition. It is felt that Cadbury's, already strong in France, will attempt to buy the mineral water brands Nestle will be forced to sell following the likely success of its Perrier takeover bid.

Hanson fell 3p to 197p as James Capel downgraded. The stockbroker cut from pounds 1.15bn go pounds 1.06bn for this year and from pounds 1.260bn to pounds 1.175bn for next.

Kleinwort Benson chipped at Cable and Wireless, cutting from pounds 808m to pounds 744m and pounds 916m to pounds 890m. The shares, however, rose 4p to 537p as hopes grew that a statement will be made today about the rumoured link with the US West telecommunications group.

Lasmo, the worst performing Footsie share over the past year, enjoyed modest strength, gaining 6p to 131p. A revaluation of its Indonesian oil reserves helped. So, it seemed, did some discreet support from Cazenove.

Banks, as the interim reporting season looms, had a difficult sesson with Barclays, still reflecting a downgrading by its Barclays de Zoete Wedd securities arm, falling 10p to 305p. Abbey National lost 9p to 267p.

Wellcome, in the last week before its share tender offer, fell 25p to 845p. Glaxo Holdings gained 10p to 688p.

Cray Electronics returned to market following its acquisition from TI Group. The shares ended 3p lower at 72p.

MFI Furniture, on its second day of dealings, still managed to hold above its flotation price - 116p, down 1p.

Reuters, the information agency, dipped 13p to 1,151p. Interim figures are due today. The market expects pounds 191m against pounds 170.1m last time.

Davies & Newman, the Dan Air airline, dived 12p to 24p on fears that another cash-raising exercise will be attempted soon.

The shares were 101p earlier this year. Last year the group was pulled back from the brink when City institutions injected pounds 53.75m. But Dan Air has not, as many expected, returned to profit because of the tough trading climate.

County NatWest expect a pounds 7m loss this year. Last year's deficit was pounds 35.4m.

The FT-SE index was at one time down 64.8 points yesterday. It closed 28.2 lower at 2,403.7, giving a little support to those who say 2,400 is the present resistance level. The 30-share index lost 28 to 1,824.1. Volume was 456.3 million, with 23,153 bargains. Government stocks, down pounds 3/4 at one time, ended about pounds 3 16 easier

Stake-building stories continue to circulate about Mirror Group Newspapers. There has been heavy trading since the shares returned to market on Friday. Yesterday they rose 5.75p to 58.5p. Trading, although below Friday's level, reached 7.5 million. Some felt the price would struggle to hold 40p, against the 125p at which they were suspended.

Shares of security printer Serif, formerly Serif Cowells, have firmed since it sold its bingo printing operation for pounds 1.7m. It is almost debt free. The company has been reorganised after a colourful time. It plunged pounds 2.2m into the red last year but is now trading profitably. The shares slipped 0.5p to 11.5p yesterday. They were more than 200p four years ago.