THE continued bleeding of the tech-heavy Nasdaq index in the USfollowing a spate of American profits warnings was exported acrossthe Atlantic again yesterday, turning the London dealing screensmore red than blue.
Despite a late rally in the London market to limit the falloutfrom yet more gloom within the tech sector, the FTSE 100 indexclosed down 25.6 points at 5588.4. At one stage the Footsie hadslumped 90 points following its 114 point fall on Wednesday.
The damage was also reined in late in the afternoon as WallStreet reopened more positively, the Dow Jones industrial averagetrading up more than 30 points by the London close.
Telecom equipment firms Spirent and Marconi were among the majorcasualties, with market professionals wondering whether they arelikely to follow the lead of Canadian giant Nortel and make theirown profits warnings. Spirent closed down 21.75p at 362.25p andMarconi, which has been savaged already this week, dipped another18p to 355p.
Marconi shares have racked up a 52 per cent loss up to now in2001 as sellers are increasingly doubting it can stay immune fromthe US telecoms fallout. It is also believed Deutsche Bank'sanalysts have downgraded their earnings per share forecasts for theBritish company to 17.7p from 19.1p for 2001 and to 19.4p from 23.6pfor 2002.
One senior trader commented: "If you look at some of these newestimates you could say that Marconi still looks expensive comparedto European rivals." There have also been recent profits downgradesin the sector recently on the likes of Alcatel and Ericsson. Othertelecoms fallers included Colt Telecom, off 54p at 770p, Vodafonedown 7p at 197p, and Cable & Wireless giving up 10.5p to 474p. Thetelecoms sector as a whole was responsible for 20 points of theFootsie's drop.
Software group Misys fell 29p at 508p, and computer services firmCMG dropped 28.5p at 638p. Baltimore Technologies, the internetsecurity business, slumped 6.25p, or 6.7 per cent, to 87.25p.
Peter Chambers, chief investment officer at Gartmore InvestmentManagement, said: "I suspect that an awful lot is priced into thesemarkets, but there may well be a few more months of profit warningsin the United States.
"We've got a situation where the markets will only finally bottomout when the earnings position becomes a little bit clearer."
Among the retailers, biggest story of the day was the latestmassive restructuring at Marks & Spencer, heavy job cuts helpingprompt a seven per cent rise in the shares to 266.5p.
Also doing slightly better was Kingfisher, the Woolworths to B&Qretailer, whose shares advanced 4.25p to 457p, while electricalsstores group Dixons firmed the same amount to 265p.
Supermarkets group Safeway increased 9.5p to 326p, rival Tescofell one penny to 248.5p, while chemists chain Boots was 12pstronger at 631p.
There was bad weather for holiday groups Airtours and FirstChoice after the Office of Fair Trading warned the pair they couldface legal action over their refusal to co-operate with theregulator's probe into cancellation charges.
The announcement, which also involved Thomson Holidays and JMCHoldings, sent Airtours's share price 14p lower at 274p, while FirstChoice dipped 6p at 140.5p.
Other fallers included bars group Po Na Na, which lost 25p at90p, after saying recent trading at its largest venue, theHammersmith Palais, had been disappointing and would affect full-year profits.
Ahead of today's Competition Commission public meeting in Londonon the proposed merger of Lloyds TSB and Abbey National, Britain'ssecond biggest mortgage lender, Lloyds shares added 2p to 688p,while Abbey also added 2p to 1092p.
Elsewhere in the banks, Royal Bank of Scotland, still suffering afusillade of criticism about bonus payments to leading directorsbecause of the takeover of NatWest Group, jumped 62p, or four percent, to 1567p. Halifax was 6p to the good at 710p, HSBC drifted 3pto 815p, Barclays advanced 58p to 2145p and Bank of Scotland was off3p at 682p.
Media stocks came under pressure on a more cloudy outlook fortelevision advertising revenues, traditionally one of the keyindicators of business confidence.
Carlton Communications, subject to recurrent City rumours of apossible profits warning, slid 20p, or 4.8 per cent, to 395p.Scottish Radio Holdings, whose flagship stations are Radio Forth andRadio Clyde, fell 15p to 1350p after bearish comments on advertisingin its latest trading update.
Traders said cyclical and defensive stocks with solid earningsstreams were continuing to come into favour. One trader said: "Whatmoney coming into this market right now seems to be finding its wayinto stocks with visible, dependable yields."
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