Footsie dives to five-year low
MORE companies ran scared of tumbling stock markets today as London shares plunged to their lowest for more than five years amid the deepening crisis of confidence in corporate accounting.
The fragility of investor confidence was blamed for an 11th-hour decision by insurance broker Heath Lambert to delay a £470m stock market flotation. The share sale was due to be priced today. The company said it would decide within three days whether to go ahead with the float or pull out.
SABMiller, the world's second-largest brewer, cancelled its 120m share offering last night, blaming bad market conditions and lack of investor interest. David Liston at stockbroker Gerrard said SABMiller was aware of market conditions when it announced the placing yesterday. 'They wanted to get the placing out of the way to remove any uncertainty surrounding the share price and what they got was a slap in the face,' he said.
Bucking the trend was fashion house Burberry, which said its float was still on track.
The news came as the FTSE 100 ended the day down 190.1 points at 4230. The fall was exacerbated by early losses across the Atlantic, with the Dow Jones Industrial Average off 170.5 points, nearly 2%, at 8643.
The FTSE 100 is trading at the lowest level since before Tony Blair came to power in May 1997. Since the start of the week £72bn has been wiped off the value of leading shares.
'We're in the throes of capitulation - I don't think that's too strong a word,' said Stephen Hatton, analyst at online broker deal4free.com. 'There is a total loss of confidence. There are concerns, not just about corporate accounting but generally about the market and there's a self-fulfilling downward spiral.'
News of a criminal probe into another US telco, Qwest Communications, pummelled US stocks last night with the Dow recording its biggest one-day percentage fall since the immediate aftermath of the 11 September attacks on the US and leading to follow-through selling in Asia and Europe.
There was further bad news on Wall Street as pharmaceuticals group Bristol-Myers Squibb said it was being investigated by the Securities and Exchange Commission over its sales-incentive programme, which saw massive overstocking of its drugs at wholesalers and excessively boosted last year's fourth-quarter sales.
