Market Report: Traders turn attention to job security

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On a day of nothing but pain for the markets in London, traders were feeling anxious and self-reflective. As the life insurers, miners and oil firms sent the blue chips sprawling, those on the floor were more preoccupied over where the job cuts were going to hit next.

Following Deutsche Bank's move this week to cut 900 and 30 leaving Morgan Stanley's cash equities desk, a series of rumours did the rounds yesterday over which City firms would see the next casualties. One trader said: "There was a little bit of apprehension in the market, but really most people were just looking at how many people will be laid off. Takeover chat is dead."

The FTSE 100 was in the doldrums, following the 5 per cent slide overnight on the Dow Jones Industrial Average as dire economic forecasts continued to emerge out of the US. Asia followed in the morning, and the UK top tier ended down 3.26 per cent at 3,874.99, the lowest this month.

There were plenty of stocks on the downward slope, with a couple of life insurers looking distinctly unwell. Aviva was the worst on the day, as it was smashed 16.77 per cent to 292.75p.

The plunge was prompted by falls in their peers across the Atlantic the previous night, with Dow Jones' index of US insurance stocks 10.7 per cent lower on Wednesday. The falls in the US were prompted by mutual fund sell-offs in the stocks fearing further falls in the equities markets. Prudential was not far behind, down 16.33 per cent at 246p.

The ever-advancing global economic downturn also dragged on the miners as fears of weakening demand saw commodity prices fall. Eurasian Natural Resources Corporation was the worst, down 14.46 per cent to 191.4p, but by no means the only one.

A bearish sector report from Merrill Lynch led to a fall in Severn Trent's shares. The US broker cut its target price from 1520p to 1300p and downgraded the stock to a neutral rating.

Analyst Fraser McLaren noted the utilities will report their half-year numbers next week "and we anticipate that there will be little cheer for investors – whether in the numbers or the broader outlook for the sector".

There were a few positives and the stumbling British banks were in good nick yesterday. Royal Bank of Scotland was up as shareholders were expected to, then duly did, pass the £20bn bailout plan, which sees 60 per cent of the company fall into state ownership. The shares rose 8.75 per cent to 46p, although the bank was displaced as top dog at the close by HBOS, which rose 11.98 per cent to 72p.

There was positive news on the high street, as retail sales data came in better than expected, with a decline of only 0.1 per cent. Experts had been talking about declines of 1 per cent.

Next was the pick, up 4.3 per cent at 970p, while Marks & Spencer, on the day of its one-off 20 per cent sales, rose 1.88 per cent to 203.75p.

On the second line, even the Eagle adventurer Dan Dare couldn't have stopped the rise of Mecom, David Montgomery's publishing group. The stock, which had been the focus of bid chat the previous day, was up a further 52.32 per cent at 2.3p. Supposedly, Germany's Axel Springer is preparing to a bid for all, or part, of the group.

It was followed by a few sportsmen looking for a punt on Ladbrokes. One trader believes the rises came from the appearance of Eminence Capital on the shareholder register several days ago with a 4 per cent holding, although it didn't make much of a splash at the time. "This kind of investor doesn't just sit on his stake," he said. It was helped by a UBS report bigging up William Hill, and, the trader reckoned, the company cleaning up on John Sergeant. It closed up 10.37 per cent to 162.5p.

It was a bad day for IG Group as the spread-betting firm's value plunged by over a quarter to 166p. The news came after the group warned on half-year profits in the wake of a leap of bad debts to £15m. The share price tanked despite its reports of a leap in revenues up 45 per cent to £125m.

On AIM, a few of the mining and oil stocks managed to shake off the woes dogging their larger peers on the top tier. Cambridge Mineral announced gold production had started at its mine in Quintana, Colombia, which sent the shares soaring 50 per cent to 1.625p. The oil exploration group Afren enjoyed solid gains after it farmed out a 20 per cent stake of an exploration area in waters off Ghana to Mitsui. It rose 7.63 per cent to 35.25p.

On the downside, Bateman Engineering released a full-year profit warning sending it 56.57 per cent down to 21.5p. Elsewhere, Oilexco was forced to pull plans to raise $150m (£100m) through a convertible bond after the news sent the share price plunging. The shares closed 24.38 per cent at 29.5p.