The FTSE 100 was 35.44 points behind at 4120.55 while the FTSE 250 fell to 7239.66, down 130.09 points, at around 11.05am.
Travel and tourism stocks were thrown off course as traders began to fret about the impact of the swine flu outbreak, which has claimed numerous lives in Mexico, and raised fears of a potential pandemic. Carnival, the cruise operator behind P&O Cruises and the Cunard Line, was the hardest hit, retreating to 1799p, down 7.2 per cent or 140p, while British Airways eased to 151.8p, down 7.4 per cent or 12.1p.
Swine flu fears, although negative for the travel-related stocks, boosted the blue-chip pharmaceutical issues, with GlaxoSmithKline, up 3.4 per cent or 34.5p at 1040p, climbing to first place on the benchmark index. AstraZeneca, up 2.8 per cent or 66p at 2460p, was at third place, while Shire was 1.7 per cent or 165p ahead at 890p.
Elsewhere, Aviva advanced to 282p, up 3.2 per cent or 8.75p, after saying that its capital cushion had swelled to £2.5bn, while first quarter sales had climbed by a better-that-forecast rate of 11 per cent.
The news was welcomed by analysts and investors alike, with Deutsche Bank, which was amongst the first to question the strength of capital buffers in the life insurance sector, saying that Aviva had “shot the lights out this morning”.
“To some respect, this looks to have been anticipated by a 15 per cent move up in the shares on Friday, but nonetheless, the solvency strength is way ahead of expectations. Most important is the first quarter solvency figure of £2.5bn, some £600m above our own estimate (which in turn was above consensus),” Deutsche analyst Nicholas Byrne said,
“The positive surprise here looks genuine – relative to our own forecasts, the difference is £200m of dividend taken in the form of scrip (though obviously this is effectively the issue of new shares), £100m from the sale of Delta Lloyd Health (actually sold 18 months ago, but only completed in January 2009) and £200m from a further stop-loss reinsurance deal between the UK life division and Swiss Re.”
The private equity group 3i was 7.3 per cent or 27p behind at 344.75p after the company said that it was considering a range of financing options, including a possible equity issue. The admission follows recent reports of a possible £500-£700m fundraising as the company attempts to reduce its debts.