Market report: Wednesday close

Michael Clark12 April 2012

THE first signs of panic were evident in the Square Mile as share prices spiralled downwards to levels last seen just before the Tory General Election defeat five years ago. The blue-chip FTSE 100 index ended down 154.2 points at 4392.6 after an early mark-up was wiped out and US markets again headed into the red.

The Dow opened higher in early New York trade as the bears closed positions ahead of Thursday's 4 July celebrations. But these gains were short-lived and sentiment once again focused on the depressed US economy and the growing number of accounting scandals.

Advanced Micro Devices, a supplier of microchips and Intel's biggest rival, came out with another warning last night - its second in a month. It has cut its second-quarter sales forecast for personal computer processors to $600m (£391m) against earlier estimates of between $620m and $700m.

In London, support services specialist Capita Group suffered one of the biggest hits, down 12 3/4p at a new low of 282 1/4p. It was poor timing for broker HSBC, which has just issued a 'buy' recommendation. Other brokers are worried about its accounting practices and at what stage a contract is introduced to the accounts. It has also been rattled by reports about problems with a major contract to administer criminal records for the Home Office.

Vodafone fell 5 1/2p to a low of 80 1/2p. Whispers in the market claimed the mobile giant was the subject of a Financial Services Authority investigation into certain share dealings. Vodafone says the story is 'absolute nonsense' but it underlines how easy it is to get stories like that going in current market conditions. Vodafone is also seen as a front-runner to buy Vivendi's stake in French mobile phone operator SFR.

BP, Britain's biggest company, dropped 11p to 532 1/2p, despite a 'strong buy' recommendation from Merrill Lynch. Rival Shell fell 4p to 481p, even though UBS Warburg upgraded the shares from 'hold' to 'buy' and raising its target price from 520p to 560p. Industrial gases supplier BOC fell 35p to 970p after going ex the 22 1/2p dividend.

Debenhams was 11p dearer at 330p after the stores chain said it would buy back up to £100m worth of its own shares based on last night's closing price of 319p.

Builder Balfour Beatty, 4 1/2p lighter at 221 3/4p, has gone on the Lone Star trail again, winning a $1.4bn consortium contract to design, build and maintain Highway 130 in Texas. Work on the 90-mile toll road starts next year and it will open in phases. The group has now won eight of the 10 contracts issued by the North Texas Turnpike Authority.

Demand for hardware and services from Computacenter's investment banking clients has fallen since the second half of last year. But chief executive Mike Norris assured investors that, if current depressed market conditions continue, pre-tax profits will be in line with last year's £51.1m. He said the first half of the current year was showing a marked improvement. The shares gained 9p to 291 1/2p. Worries about the need for fresh funding saw Cookson Group fall 5 1/2p to yet another low of 35 1/2p.

Geoff Foster of the Daily Mail on yesterday's trade
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