A possible bank merger and a share buy-back for Capita brought some colour to a queasy FTSE today, though stocks closed lower again as investors braced for more US earnings and news on possible war in Iraq.
The index of top British blue-chips ended down 0.9 per cent or 33 points at 3,780 points, off the day's low of 3,733.4, in average volume of two billion shares.
An explosion on a French supertanker in Yemen added another dash of unease to an already jittery market, awaiting a prime time television address from US President George W. Bush later to rally Americans behind a possible war on Iraq.
Telecoms took 15 points off the index as heavyweight Vodafone - boosted last week by hopes of a share buy-back - dropped 4.2 per cent to 86-1/4 pence after figures showed that its Japanese carrier, J-Phone Corp, saw growth in customer numbers slow sharply in September. Market leader NTT DoCoMo lured 52 per cent of total user growth.
Telecoms testing equipment maker Spirent dropped 6.1 per cent to 27 pence and was among the top 10 by volume after WestLB Panmure said it had cut its rating to "neutral" from "buy" on fears of a cautious trading update in the fourth quarter.
Drug stocks wiped 10 points off the FTSE, led by pharmaceutical giant GlaxoSmithKline which dropped 2.2 per cent to 1276 pence after investment bank UBS Warburg cut its rating on the company to "hold" from "buy".
At its current level, the FTSE is 4.7 per cent above the near seven-year intraday low of 3,609.9 set on September 24. Abbey National zoomed up the leaderboard, gaining 5.9 per cent to 535-1/2p after Bank of Ireland said it had made an approach to the British firm about a possible merger - though investors said a marriage made little sense.
The banking sector overall added 10 points to the FTSE, recovering from an early sell-off amid persistent fears about the sector's stability. Barclays gained 3.1 per cent to 400 pence after positive comment from its chief executive, who said he did not see any reason to tighten lending criteria.
Outsourcing firm Capita jumped 12 per cent to 186-3/4P after it said it would seek shareholder approval to buy back 10 per cent of the company's stock and gave an upbeat trading statement.