The Anglo-Dutch giant's pre-Christmas present came a day after Arcadia, the fashion retailer, spectacularly wrong-footed the Square Mile. Reed blamed rising competition and tough Asian markets for the downturn, but analysts were left fuming by the extent of the earnings shortfall. They had a number of chats with the company in recent months and had not got the impression things were that bad.
"The scale of the downturn was larger than we thought," said one despairing analyst before moving to slash 1998 forecasts by around 6 per cent to pounds 770m.
Reed's shares were suitably punished as brokers turned their surprise into sell orders. The spurned analysts' revenge left the stock 10.5p down at 443p. Arcadia, the owner of the Burton and Top Shop chain, continued to feel the pinch of Wednesday's shocker and lost 21p to 191.5p after Morgan Stanley downgraded.
Footsie was restless, ending up 58.9 points at 5,566.1 after a volatile session. To mix sporting metaphors, the blue-chip index swung like an England tail-ender for most of the day. It went down by 118 in the morning as worries over Wall Street and a gloomy CBI survey dominated. But at lunchtime a raft of interest-rate cuts in the euro-zone came to the rescue, fuelling hopes of a similar move by the Bank of England next week. The more optimistic dealers are even talking of another half-point drop.
The second-liners were much more consistent, remaining on a downward slope through the day. The medium cap finished down 47.8 at 4,756.6, while the small cap ended 15.4 lower at 2,021.4.
GEC led the blue-chips higher with a 12 per cent rise to 505p. The defence giant posted good profits and revealed that it is close to using its cash pile for a mega-deal with a rival: French groups Alcatel and Thomson-CSF are the market's favourites. The eternal tip, British Aerospace, up 22.5p to 500p, is also on the list.
Associated British Foods, annual meeting today, was boosted by speculative buying and digested a 47p rise to 598p without problems.
Financials were in good form. Royal Bank of Scotland put on 7 per cent to 932p after pleasing analysts with a 32 per cent rise in profits. Schroders went against the grain and advised to switch to Bank of Scotland, up 35p to 675p. The rest of the pack was buoyed by interest rates hopes. Sun Life & Provincial, 35.5p higher to 528.5p and Allied Zurich, up 34p to 851p, were the pick of the insurers.
Alliance & Leicester, 36p higher at 895p and Abbey National, 37p stronger at 1185p, batted for the banks.
Among the Footsie losers, Railtrack was shunted into the sidings with a 73p loss to 1,589p after Merrill Lynch downgraded. British Airways nosedived 14p to 377p after reporting weak passenger yields.
Retailers were on the cut-price shelves. GUS started the sale: slow growth at the Argos stores and its mail order catalogue pushed the stock down 25p to 549p. A set of dire retail numbers from the CBI compounded the retailers' plight. Tesco headed the Footsie fallers with an 8p plunge to 166p. Kingfisher, a recent stalwart, dropped 18.5p to 526.5p, while Next was not looking smart after a 17p fall to 427p.
The market turned to sex but found little solace. London International, maker of Durex condoms, flagged over 30 per cent to 130.5p - the year's low - after warning of a slowdown in its plastic gloves business. Full- year forecasts were chopped by pounds 7m to around pounds 40m. Flextech did better: the broadcaster hardened 16.5p to 619p after selling its stake in Playboy TV.
Two hotels groups found favour. Bass, the brewer which also owns the Inter-continental Hotels chain, reported good results and sounded upbeat. The shares rose 17p to 830p. Stakis said London is booming and checked in a 4p rise to 111p.
But no mid-capper could better Coats Viyella. The struggling textile group put on over 7 per cent to 24p after revealing plans to sell its precision engineering division. Lasmo vied for FTSE 250 top spot but was held to second place: the ailing oil explorer rose 7.5p to 127p on talk of a forthcoming bid. English China Clays, the minerals and chemicals group, moulded a 5.1 per cent rise to 184p after a positive meeting with analysts.
Norcros advanced 3.5p to 57p. The building materials group is said to being stalked by John Mansfield, loser in the battle for Marley. An offer of 80p a share could be on the cards. City Site, a Scottish property company, soared 2p to 32.5p after saying that the contractor Miller is talking about a 35p-a-share offer.
Masthead Insurance was up 8.5p to 115.5p after being bought by rival Lloyd's vehicle Wren for pounds 49m.
SEAQ VOLUME: 998.5 million
SEAQ TRADES: 65,054
GILT INDEX: 114.23 -0.01
VITAL, a financial services specialist, made its debut on the junior Ofex yesterday after raising pounds 225,000 through a placing and open offer. The Manchester firm has reversed into the British Taxpayers Self Assessment PLC (BASIC).
BASIC was an unsuccessful attempt to set up a company to help people with tax self-assessment forms. Vital, which handles the financial affairs of several Mancunian high-fliers, closed unchanged at 5p.
FAREWELL TO Netica, the publisher of an Internet car magazine. The company has appointed receivers and yesterday ceased trading on Ofex.
Netica hoped to create an on-line market for used cars by pooling the stocks of 600 dealers on its www.autolocate. co.uk site. However, it run into trouble when a major media company did not exercise its option to buy into the company. Netica bowed out at 80.5p.Reuse content