FTSE down after Wall Street slide

By William MacNamara and Michael Hunter

London equities were rapidly losing ground by midday on Thursday, tracking steep overnight losses on Wall Street. Shares in the London Stock Exchange were in focus as LSE executives met to discuss a bid for Borsa Italiana.

At noon the FTSE 100 was trading 0.7 per cent or 45 points weaker at 6,604.3. The FTSE 250 was 1.65 per cent lower at 11,600.7 with weakness in real estate and support services stocks helping to generate a loss of 197 points.

Overnight in New York the Dow Jones Industrial Average fell 1.1 per cent to 13,489.4, as higher bond yields and lower oil prices weighed. There was also concern after Bear Stearns said two of its hedge funds active in mortgage securities were to be wound up amid continuing fall out from the sub-prime lending crisis in the American housing market.

News of the London Stock Exchange's advanced talks about a potential £1bn bid for Borsa Italiana pressured shares in the UK market operator, which fell 1.5 per cent to £13.45.

Jessops rose 9.7 per cent to 19¾p on news that HSBC extended and enlarged an existing banking facility to the struggling camera retailer, whose shares have fallen 88 per cent this year. On the same day it announced plans to close one quarter of its stores, the company said HSBC increased by £4m to £66.5m its banking facility.

Financial stocks came off their recent strong run as equities markets cooled. Shares in Man Group were off by 0.2 per cent to 624p despite news that the upcoming floatation of MF Global, its US brokerage business, could value it at between $4.6bn and $5bn.

Fund manager Schroders lost 1.8 per cent to £13.41 and Aberdeen Asset Management lost 2.5 per cent to 198p.

Standard Chartered topped blue-chip performers by midday, gaining 0.7 per cent to £16.70 after JP Morgan, UBS, HSBC, and ABN Amro all upgraded their positions on the bank's stock, citing strong earnings momentum in Asia.

There were further losses for DSG International following Wednesday's news of lower profits and its decision to not exercise an opportunity to enter the Russian market. The operator of the Curry's electricals chain led declining shares at midday, falling a further 4.2 per cent to 162p.

Go-Ahead was one of the only FTSE 250 stocks trading in positive territory by midday. One of its units, Govia, won an eight-year government contract to operate rail routes in the West Midlands. [via]