Market report: Wednesday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

Shares of telecoms equipment supplier Marconi slumped to a near two-year low, falling 32 1/2p to 466 1/2p, another victim of the telecoms sell-off on both sides of the Atlantic.

Brokers say the deterioration in the group's fortunes reflects the poor results from US telecoms manufacturers, lower spending by network opera-tors, rising debt levels and the sell-off by investors of the sector in general.

Marconi was trading at a best-ever 1250p in September but has dropped like a stone ever since. US securities house Goldman Sachs put the boot in last week by reducing its target price for the shares to 430p.

Elsewhere in the telecoms sector, Vodafone retreated 5 1/4p to 187 3/4p after confirming plans to sell 113.85m shares in France Télécom back to the French company. The sale raised £7.4bn for Vodafone. British Telecom came under fresh selling pressure, falling 26p to 570p.

Share prices overcame early falls in thin trading conditions but slipped back into the red late in the session as US markets racked up fresh heavy losses. The FTSE 100 index ended down 23.3 at 5917.9.

The outlook for the market remains uncertain with investors worried by the move into recession by the US economy. Many punters appear to be pinning their hopes of a revival in the market's fortunes on an early cut in US interest rates. Federal Reserve chairman Alan Greenspan has hinted there will be further interest rate cuts to come, but not just yet. Some brokers say cheaper money may not be enough kick-start the American economy anyway.

Lattice was one of the biggest losers among the top 100 companies, falling 9 1/2p to 128 1/2p. Powergen was 20p off at 653p. Gas and electricity regulator Ofgem is proposing separate price controls for the National Transmission System and local distribution zones. This is because the current RPI-X formula for pricing encourages delays in capital expenditure.

The initial reaction of the market on learning of the fatal rail crash at Selby in Yorkshire was to mark Railtrack down 17p to 915p.

Abbey National jumped 37p to 1167p as the merger talks with Bank of Scotland, 17 1/2p dearer at 755p, foundered. Abbey blamed the breakdown in talks on the uncertainty created by the offer from Lloyds TSB, up 6p at 656p, which has been referred to the Competition Commission, but may be allowed to go ahead later this year. Any merger between Abbey and BoS would not have benefited either group of shareholders.

Legal & General slid 1/2p at 173 1/2p after broker Credit Suisse First Boston downgraded its recommendation on the shares from 'buy' to 'hold' and cut its target price from 195p to 175p in the wake of Tuesday's results.

The continued sell-off on the Nasdaq proved to be bad news for hi-tech companies quoted in London. ARM Holdings fell 22p to 310p after joint house broker Morgan Stanley Dean Witter cut its target price for the shares from 1000p to 800p. The move was made to reflect the fall in sales of mobile phone handsets.

Stratus Holdings tumbled 21 1/2p to 36p after warning it was 'four to five months' behind its business plan and was negotiating additional funding.

• Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

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