Leading shares yesterday fell to their lowest levels since the beginning of March, as dealers endured another volatile day after Friday's sell-off.
Even though the FTSE 100 index recovered from its worst levels during the course of the day, the five-year high the index achieved three weeks ago now seems an awfully long way away.
At one point yesterday the index had fallen 152 points, following Friday's 2.15% drop and in the wake of Japan's Nikkei index closing overnight at its lowest for two months. The dollar lost ground in early trading, falling to a year low against the euro as dealers fretted how the currency, widely perceived to be overvalued, might be allowed to fall without causing strains in the global financial system. Commodities, even gold, fell back from their recent highs, pushing mining stocks lower.
By the close of London trading the dollar was recovering and the FTSE 100 ended at 5841.3, down 70.8 points or 1.2%. This still represented the worst two-day fall since September 2002. Volume was reasonable with 1.87bn shares changing hands.
Given yesterday's slump in commodities it was no surprise that six of the top 10 fallers were miners, with Kazakhmys down 111p to £12.04, Xstrata 202p lower at £22.08 and Antofagasta falling 169p to £22.73. Xstrata was under additional pressure because investors expect it to launch a bid for Canada's Falconbridge, which has already agreed a £9.3bn deal with fellow Canadian miner Inco. Yesterday the company said it had made no decision on whether to wade into the fray.
There were some bright spots. Telecoms were in favour for their defensive qualities. BT was up 5.5p to 216p ahead of full-year results on Thursday, which are expected to show profits around £6bn. There was also vague talk of, yes, a possible private equity bid.
Vodafone was 1.5p better at 125.25p on hopes it will receive $48bn (£26bn) for its 45% stake in America's Verizon Wireless. No deal is believed to have been done yet, but analysts believe it is only a matter of time.
The FTSE 250 was dominated by bids. Biotech group Cambridge Antibody Technology surged more than 64% to £12.99 as AstraZeneca, down 7p to £28.50, agreed to pay £702m or £13.20 a share for the business.
Enodis, which makes cooking equipment for the likes of McDonald's, was up nearly 14% to a five-year high of 199.5p after it rejected a £796m, or 195p-a-share, offer from US rival Middleby. At the same time the company got its bid defence in by announcing half-year profits up 71% to £24.4m and saying it was confident about the full year. Analysts said Middleby could come back with a higher bid, or another predator could be flushed out.
Pennon, which owns South West Water, added 28p to £13.05 on talk of a takeover at a hefty premium. The company yesterday announced a deal to buy landfill and recycling business Wyvern Waste Services from Somerset County Council for £25m.
Elsewhere, media buying group Aegis edged up 0.25p to 135.25p. French corporate raider Vincent Bolloré has increased his stake to 26.56% from 26.03%.
A warning from RM, which supplies computers to schools, about its future performance left it nursing a 17.5p loss to 183p. The company reported a £2m profit in the six months to March, but said delays to the government's schools improvement project - Building Schools for the Future - would hit earnings. The government decided to award contracts at a local rather than national level, meaning extra bid costs as the company tenders for business from local authorities. There will also be a significant delay before it can book any revenues.
Technology and outsourcing group Xansa slipped 0.75p at 87.25p. Shore Capital expects the company to issue a pre-close trading statement this week, possibly tomorrow, and believes this could bring a round of downgrades from analysts. The broker told clients to sell.
Aim-listed Avanti Screenmedia fell 10p to 261.5p as it signed a €100m (£68m) contract to build and launch a satellite system. Around a third of the funding for the satellite, to be called Hylas, will come from the European Space Agency. Avanti raised £25m from investors in November 2005, and the shares slipped on fears it will have to spend more to get the satellite up and running. Avanti hopes to provide broadband telecoms and high definition TV.
Pentagon Protection, the specialist glassmaker, added 10% to 1.25p as it sold its loss-making automotive business for a nominal amount to the management. The business being sold, GlassTech, supplies bulletproof glass for cars owned by celebrities, reportedly including the Beckhams and Madonna.
Bizspace, which supplies industrial workspace for small businesses, slipped 1.5p to 85p. The company is expected to announce its results tomorrow, and dealers expect news of a revised asset value which could be around 95p. Bizspace said at the end of March it was in bid talks - said to be with property group Highcross - and the new asset value will give a clue as to how much a purchaser would have to pay.
Lingerie change
Today's annual meeting of Sherwood, the lingerie business, is the first for recently appointed chairman Michael Hobbs and is expected to signal a new strategy of becoming a brand specialist. Sherwood, down 3% at 13.125p, recently acquired the Charnos brand out of administration and further acquisitions are being sought. Sherwood has come to the attention of three active investors including Peter Gyllenhammar, Peter O'Reilly and Denmark's Ib Sonderby, who between them have more than 50% of the shares. They were originally expecting the company to return cash to shareholders, before a pension fund problem ended that. Now however they are backing the change of direction. A name change to Intimas will be proposed.