- MORNING REPORT: Headline shares were firmly lower in early deals, with Barclays again providing the main downforce and with telecoms giant Vodafone lower as it traded ex-dividend, investors shrugging off strong gains across Asia this morning.

At 9:00am, the FTSE100 was down 73.71 points at 4,403.31, while the FTSE250 dipped 43.79 points at 7,728.27 and the FTSE Smallcaps shrugged off the dull sentiment, adding 2.95 points at 2,317.12.


In the US last night, the Dow was up 19 points at 8,741 with the Nasdaq 8 points higher at 1,822 and the S&P500 up 2 points at 945.

In Asia today, the Nikkei was up 37.36 points at 9,741.67 and the Hang Seng was last up 149.77 points at 18,538.85.

Crude oil traded at $68.85 a barrel on Nymex.


Yesterday's move by Abu Dhabi's IPIC to take profits from the sale of 11% of its stake in Barclays raised concerns that other investors will be looking to take profits in banking stocks after their recent revival.

As a result, Barclays dropped a further 16.75p at 256.75p, the poorest blue chip performer again, Lloyds fell 3p at 66.5p and Royal Bank of Scotland slipped 0.7p at 37.4p.

Non-life insurer Amlin slumped 18.5p at 320.5p on news it is taking over Fortis Corporate Insurance from the State of the Netherlands for €350m, part funding the acquisition by the issue of 23 million new shares.

Others in the sector demonstrated their fragility, with Prudential down 7p at 453.25p, Aviva off 6p at 347p and Standard Life 5.2p weaker at 197.3p.

Vodafone fell 5.75p at 113.05p following yesterday's warning of a reduction in the level of demand from the group's customers for existing and new products and services as the global recession bites. Cable & Wireless weakend in sympathy, down 3.8p at 130.7p, both companies also hit by trading ex-dividend.

BP fell 9.75p at 520.25p, after saying it is seeking to limit its heavy pension by withdrawing the final salary pension option for new recruits. Shell said it has no plans to follow BP's example, but the shares slipped 37p at 1,684p with the general market, shrugging off news that crude was edging ever closer to $70 a barrel.

The mining sector lost ground as nervous investors took profits and headed for safety stocks.

Xstrata tumbled 18.5p at 759.5p, Lonmin fell 48p at 1,520p and Anglo American was down 57p at 1,841p. Rio Tinto slipped 47p at 3,006p, also unsettled by unconfirmed reports it might re-visit the Chinalco deal and look to raise funds via a rights issue.

Holiday firm Thomas Cook took heart from sterling's continued strength against the dollar and the euro, up 0.75p at 230.75p.

Supermarket operators provided a rare bright spot, following news of improved consumer confidence in May, with Tesco gaining 3.5p at 355.9p, Sainsbury up 0.75p at 315p and Morrisons 2.75p better at 246.75p.

However, prosthetics maker Smith & Nephew was the biggest blue chip winner early on, up 8.75p at 474p.

Tobacco companies were also on the buy list as investors headed for safety, with BAT up 7p at 1,693p and Imperial Tobacco ahead 27p at 1,612p.

Story provided by Business Financial Newswire