Market Report: Worldwide worries weigh on blue chips

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The Independent Online

If you were one of the punters who asked recently if the benchmark index could manage to reach 6,000 again, then the answer is – not any time soon. After a lacklustre summer, traders had hoped the autumn could be better. But yesterday, the FTSE 100 posted its biggest one-day drop in almost a month, wiping out last week's gains.

The index sunk 85 points to 5,797.91, dragged down by renewed eurozone crisis concerns, weak US earnings and caution ahead of today's Chinese manufacturing index figures.

The only chink of light on the blue-chip index was Cambridge star ARM Holdings. The company which makes chip processors for a variety of gadgets, including Apple's iPhones and iPads, revealed its pre-tax profits had jumped 28 per cent to £68.1m for the three months to October. Its shares computed a 45.5p gain to 640p, taking it to the top of the leaderboard.

And ARM could be in for a further boost – it gets a royalty payment every time Apple sells a gizmo created with its technology, so last night's launch of the mini-iPad may help it higher.

Talking of microchip makers from Cambridge, investors in CSR were counting their chips after news that its deal to sell its mobile handset business to Samsung will bring a special payout their way.

If you are not already an investor, analysts reckon it is still a good time to invest. Liberum Capital kept its buy rating on the shares and issued a share price target of 400p. It thinks the group has "transformed after the sale of its handset business" and "no longer deserves to trade at a discount to peers".

The wireless technology specialist confirmed the completion of the sale to South Korea's Samsung in its third-quarter results. The deal leaves Samsung with a 4.9 per cent stake in the company. Details of the $285m (£178m) tender offer to shareholders will be confirmed next quarter.

CSR's profits soared to $32.2m, up from $24.3m in the same period last year but its shares lost 6.2p to 332.5p despite a spike earlier in the day.

The doom and gloom and the lacklustre performance of the markets meant traders had time for some gossip. But the only market chatter doing the rounds appeared to be vague speculation in the pharmaceutical sector that a purchase could be on the cards for AstraZeneca with rumours that rival GlaxoSmithKline might also be interested. But the chat failed to excite the share price and its shares lost 38p to 2,900p.

The only "real" news in the sector came in the shape of AstraZeneca's tie-up with US drug maker Ironwood to make irritable bowel syndrome drugs for China.

Anglo-Dutch oil group Shell warned yesterday that it won't be able to make its estimated production for two types of oil pumped from Nigeria, blaming attacks on its pipelines by thieves. Its shares slipped 30p to 2,172.5p.

Journalists and scandal go hand in hand. This time, phone-hacking allegations have knocked more than 10 per cent off the share price of the owner of the Daily Mirror.

A lawyer has lodged legal claims for four people – including former England football manager Sven-Goran Eriksson – accusing the group's newspapers of hacking into phones to get stories. As a result, Shares in Trinity Mirror lost 7.25p to 64.5p. The case is yet another problem for new chief executive Simon Fox.

On Monday, Investec's Ian Gordon said flog Royal Bank of Scotland shares: yesterday it was Lloyds Banking Group that displeased him. He points out that falling Dutch house prices are bad news for the bank. He gave it a share price target of 36p and claims Lloyds' "Dutch exposure is a drag on its (generally improving) bad debt story". Lloyds lost 0.52p to 40.3p.

Watchers of the luxury sector were spooked by another profit warning. This time, AIM-listed handbag brand Mulberry revealed profits won't be as high as hoped as its decision to go more upmarket has hit sales. The company's shares tumbled nearly 24 per cent, losing 314p to 1,006p.

Upmarket brand Burberry was hit by the news – and fears of the outcome from the Chinese manufacturing survey tomorrow – and it sank 38p to 1,134p. The sector will now be looking to Gucci and Stella McCartney-owner PPR's third-quarter results tomorrow for any further indications on the outlook for luxury.