A volatile week ended on a downbeat note yesterday. An early attempt by leading shares to move forward petered out as the afternoon wore on, with mining shares hit hard again and Wall Street on the slide by the time London closed.
Kazakhmys led the fallers, down 48p to 1046.5p, with fellow mining group Xstrata 74p lower at 1932p. Part of the weakness was attributed by dealers to a drop in commodity prices: gold, silver, palladium, nickel and copper all fell back sharply, hit by a sharp rise in the dollar. Xstrata was also unwanted after its Canadian takeover target Falconbridge said it preferred a rival offer from compatriot Inco and indicated it would also welcome any other bidder which wanted to join the party.
So the FTSE 100 closed 14.2 points lower at 5657.4. It is down 254.7 points since Monday with much of the damage done during Wednesday's sell-off. This is the biggest weekly points fall since July 2002.
Lower down the market, however, the FTSE 250 index managed a 57.8-point gain yesterday to 9192.6, helped by a bit of bid speculation surrounding MFI and Enodis. Volumes overall were relatively light with 2.8bn shares traded.
The question exercising minds now is where the market goes from here. The prevalent opinion seems to be that the recent fall is a necessary correction, not a 1987-style crash. Goldman Sachs, for example, said in a note that equities are attractive at current levels and remain cheap compared with bonds. But no one is willing to say there will not be further falls before stability returns.
The uncertain mood was illustrated by clients at spread-betting firm IG Index: they are split down the middle between those betting the decline will continue into the summer and those who believe it is a buying opportunity.
There were some bright spots yesterday. Dealers took a shine to steel group Corus. The initial impetus was news that rival Mittal had increased its hostile bid for Arcelor by a third to €25.8bn (£17bn), which prompted hopes that consolidation in the industry would continue and Corus was likely to be involved. A note from Deutsche Bank helped the positive mood. The broker raised its price target to 550p and told clients to buy the shares, partly on the back of recent steel price increases. Corus closed 6.25p better at 379.75p.
British Airways helped contain the damage with a set of good full-year figures showing a 21% increase in profits to £620m. Higher ticket prices and increased demand helped offset the effects of rising fuel prices, and its shares climbed 29.25p to 349.25p.
Other risers included housebuilder Persimmon, up 52p to 1200p after Thursday's slump on worries that higher interest rates would hit demand. The company was also helped by ABN Amro making positive noises on the shares. PartyGaming rose 5p to 141.25p after Dresdner Kleinwort Wasserstein advised clients to buy.
Going the other way was Cadbury Schweppes, down 10.5p to 505p as investors continued to react to news this week that the company had got off to a slow start in the first quarter. And brewer SABMiller continued its decline after Thursday's downbeat trading statement, falling another 34p to 1027p.
Lower down the share league, MFI rose 8.75p to 119p after it revealed it had received a number of approaches to buy its stores. But analysts were sceptical a deal to in effect break up the company could be easily achieved. Evolution recommended selling the shares and set a 75p target.
Enodis, which has already rejected a £796m bid from US food equipment rival Middleby, added 15.5p to 197.5p on talk of a new offer with other predators also said to be waiting in the wings.
Construction group John Laing lost 10.25p to 277.5p. The chief executive Andy Friend is leaving - to be replaced by the finance director - but investors focused on news that results at its Chiltern Railways would be hit by the Gerrards Cross tunnel collapse last year, which hit passenger numbers. The collapse happened during the construction of a Tesco store and the retailer has admitted liability. Laing hopes to agree compensation, but if it goes to arbitration it could take to the end of 2007.
Speymill, the property management company controlled by fund manager Jim Mellon, added 5.5p to 83.75p with nearly 700,000 shares traded. It has a number of property funds in Germany and the rise was attributed to a tip in one of the country's business magazines.
Continuing the Germanic theme, Bavarian-based computer manufacturing and traffic information company Inova joined Aim yesterday. Shares in the business, chaired by ex-Metronet chief executive Rod Hoare, were placed at 65p giving it a market capitalisation of £21m. It closed down 2.5p at 62.5p.
Finally, Monday will see some upheaval in Unilever shares, down 3p to 525.5p. That is the day a restructuring is due to take place to simplify the relationship between the UK and Dutch sides. The upshot is that UK investors will receive nine shares for every 20 they hold. So the current price will become 1166p. Barclays Stockbrokers has set a new target of 1355p for the shares.
Flat response
Transense Technologies, which develops wireless and battery-less sensor systems for the automotive industry, lost its early gains yesterday despite an upbeat statement at its annual meeting. The company has licensed its tyre pressure-monitoring systems to Michelin for use in trucks and investors have been patiently waiting for news on when production may be about to start. The third quarter of this year - perhaps September - seems the likely date. The company also revealed more details about a South African contract with Honeywell, manufacturing Transense's sensors. Analysts expect this to lead to further deals, not just in South Africa, but elsewhere too. The shares, however, closed 3.5p lower at 71.5p.