ECONOMIC gloom and a huge jobs cull by banking giant Citigroup cast a pall over the London market yesterday.
Citi's plans to cut 52,000 jobs in addition to those announced earlier, added to the downbeat mood among traders after dire surveys fro
m UK business groups and confirmation from Japan that the world's second largest economy is now in recession.
With Wall Street's Dow Jones industrial average also lower in early trading, the FTSE 100 index eventually closed 100.8 points, or 2.4 per cent, down at 4,132.2.
Jimmy Yates, a dealer at CMC Markets, said: "It's potentially going to be another difficult week for the market: there's going to be a lot of caution ahead of next week's Pre-Budget Report and there are few notable fundamentals due for release in the next few days, although UK inflation data will be closely watched as too rapid a decline here could be cause for panic."
The poor beginning to the week weighed heavily on banking stocks, with HBOS the leading blue-chip faller after financier Jim Spowart conceded defeat in his battle to broker an alternative deal to its proposed takeover by Lloyds TSB.
Spowart, who founded Intelligent Finance and Standard Life Bank, blamed UK government ministers and a series of leaks for ending his campaign to stop the Lloyds TSB deal going through.
HBOS shares sank 13 per cent or 12p to 74.5p, while Lloyds TSB shed 17p to 149p and Royal Bank of Scotland eased 6.3p to 44.7p. This leaves taxpayers nursing some £8 billion in paper losses as the trio are offering new shares under the government's £37bn recapitalisation plans, with the Treasury set to buy any not taken up by investors.
Barclays, which is battling to convince shareholders of its plans to secure additional capital from Middle-Eastern investors, was down 5p at 154.1p.
Among the miners suffering from economic worries, Kazakhmys dropped 32p to 237.75p and Eurasian Natural Resources fell 14.75p to 248p. Xstrata also slipped, 71p to 876.5p, as analysts at Cazenove lowered their outlook for the sector.
The leading blue-chip riser was inter-dealer broker Icap, ahead of an expected 7 per cent rise in pre-tax profits today. Shares rose 13.5p to 251.5p.
But some of the biggest gains were seen outside the top flight. Premier Foods rose 3.5p to 30.5p after weekend reports linking McVitie's-to-Penguin firm United Biscuits with a secret bid to buy Mr Kipling from its rival. Premier, which is looking to reduce its £1.8bn debt mountain, is understood to have rejected the £250 million approach.
Meanwhile, Taylor Wimpey shares rose 6 per cent after it was reported to be in the sights of a number of private equity firms. The housebuilder is saddled with sizeable debts and must renegotiate terms before early next year to avoid breaking banking covenants. Shares were up 0.6p to 9.89p. Elsewhere, Persimmon rose 7p to 247p, Bellway cheered 9.75p to 507p and Berkeley added 10p to 715p.
The full article contains 535 words and appears in The Scotsman newspaper.
