LONDON REPORT:FTSE: 5,133.9 (-26.00) Mid-250: 9,142.31 (-73.26) Small Cap: 2,888.06 (-5.77)

LONDON EQUITIES closed lower yesterday after some disappointing US data, but the FTSE 100 notched up its best quarterly performance in its 25-year history.

At the end of the third quarter, the benchmark index was up 20.80 per cent. Weaker than expected Chicago PMI and ADP employment data ensured Wall Street indices pointed lower during US morning trade, and left London stocks lower on the day. By the close, the FTSE 100 was down 26 points, or 0.5 per cent to 5,133.9. The mid-cap FTSE 250 shed 0.8 per cent to 9,142.31.

Insurers continued to point higher as speculation mounted that there would be further consolidation in the sector. Even though Generali, the Italian insurance group, said it was "not interested" in bidding for Legal & General, the life assurance group, investors were convinced predators remained poised for further deals.

Shares in Legal General rose another 6.1 per cent yesterday to 87.8p, while rival Avivawas 3.9 per cent higher at 448.1p. Standard Lifewas 2.7 per cent stronger at 219p. Bid speculation has helped drive shares in the sector higher since Resolution bought Friends Provident last month for £2 billion.

David Morrison, market strategist at GFT assessed the continuing talk, and said: “With the recovery in equities markets generally, the insurance sector is looking in much better shape.

“There has been plenty of speculation about who is still looking a bit flabby and due for a workout. But I think we need to hear of something concrete before the end of the week to keep the momentum going.”

There were losses for Marks and Spencerafter its outlook for the rest of the year remained cautious, even as it reported improved second quarter sales. Like-for-like sales were 0.5 per cent lower, with total sales up 1.9 per cent. It said 2010 was still expected to be a tough year. Shares in MS were 3.4 per cent weaker at 362.1p.

Man Group, the world's largest listed hedge fund by market value, was the best single performer on the FTSE 100 after it said the value of assets under its management rose as redemption rates eased.

The company said its clients withdrew $500 million in the three months to September, down from $1.4 billion in the previous quarter. The shares rose 7.5 per cent to 331.2p. – Copyright The Financial Times Limited 2009