Another profits warning from the US technology sector ensured a dismal day for the UK market, with the FTSE 100 index heading back towards the bottom of its long-running trading range.
Lucent, the telecoms equipment maker, was the latest earnings culprit, issuing a warning after the US close. And that bad news came on top of a further 3 per cent fall in the technology-heavy Nasdaq Composite index.
When Wall Street opened yesterday, Nasdaq was lower from the start and by the London close, both it and the Dow Jones Industrial Average were showing losses of around 100 points. Given that background, it is hardly surprising that the FTSE 100 was never in positive territory all session. At its worst, the index was down 149.6 at 6,098.1; it closed at 6,117.6, down 130.1. That left the index at its lowest level since May and down 11.7 per cent since the start of the year. Since March 1999, the FTSE 100 has spent much of the time stuck in a 6,000-6,600 range.
The losses were broadly-based. The FTSE 250 fell 134.8 to 6,461.5 and the SmallCap dropped 55.5 to 3,291.4. Among the mid and smallcaps, retailers Ted Baker and JJB Sports disappointed the market with their results.
By far the worst performance came from the technology sector, which claimed four out of the worst five performances in the FTSE 100. Bookham Technology which, like Lucent, is involved in fibreoptics, saw its shares drop 14 per cent.
The Techmark 100 index of leading technology stocks fell 178.7 or 4.9 per cent to 3,440.11, leaving it more than 40 per cent below its March peak. Nick Glydon, the technical analyst at Chase/Robert Fleming, said: "Our view is sell. Many of them can halve, and that only takes them back to where we were a year ago."
Nor was the market helped by Motorola's downbeat message about third-quarter mobile phone sales. Shares in Vodafone, the UK's largest stock, fell almost 6 per cent, despite the successful sale of Infostrada to Enel of Italy. And banks suffered their second successive down day on competition and junk bond concerns.
Oil stocks were one of the few bright spots in the market, thanks to an American Petroleum Institute report on Tuesday which revealed a fall in oil inventories. BP and Shell were two of Footsie's top 10 performers.
Richard Crehan, UK strategist at Morgan Stanley Dean Witter, said: "The UK fall is very much a US-led phenomenon."
Turnover picked up for the second day in succession, indicating that the falls in share prices were the result of significant selling. By the 6 p.m. count, 1.94 billion shares were traded and 116,000 deals had been conducted.
