Market Report: Banks mauled as Brazil spooks FTSE

EQUITIES SUFFERED one of their worst poundings as Brazil's currency crisis hit the stock market.

What amounted to a devaluation caused widespread concern around the world, and Footsie was in ragged retreat from the opening. At one time it was off 287.1 points, but in busy two-way trading the index managed to reduce its deficit to 183.5 points, closing at 5,850.1.

The index began the year at 5,566.1. Its best close last week was 6,148.8, although it hit a new trading high of 6,195.6.

Despite the slump there were indications that institutional investors, who seemed happy to chase shares in a mad scramble last week, had not completely faded from the scene. The late rally stemmed from determined buying at the knockdown prices produced by the earlier panic.

Not only blue chips were in the firing line: the mid cap index crashed 102.7 points to 4,874.4 and the small cap 31.2 to 2,108.6. Both finished well above their lows. Government stocks rose by up to 75p.

Trading was again heavy, with share turnover topping 1.1 billion. BPB, following a share buyback at 186p, was the most traded stock with turnover put at 34.5 million. The shares fell 8.75p to 188p.

Banks suffered the severest mauling as the market fretted over their exposure to Latin America, and those with long memories recalled the crashing impact of past regional defaults. Standard Chartered lost 84p (after 96p) to 742p and National Westminster Bank 105p (after 128p) to 1,066p.

HSBC was off 125p to 1,628p and Lloyds TSB 43p to 821.5p. The gloom encompassed other financials, with insurer Royal & Sun Alliance 39p down at 483p and Prudential down 55p at 899p.

In such an unfriendly environment, the high flying telecom shares were also sounding the retreat, with Vodafone 35p down at 1,039.5p and Energis 31p at 1,380p. But high flying Colt Telecom, seen by all as particularly vulnerable to any darkening climate, restricted its fall to 19p at 1,018p.

Dixons resisted the slump, gaining 44p to 958p, a peak, as its results were in line with best expectations. Whitbread, with a moderately cheerful trading statement, put on 8p to 775.5p, but Allied Domecq continued to suffer from its sober Christmas trading message, falling a further 19p to 497p. The Allied gloom again unsettled Bass, off 18.5p at 786.5p, and Scottish & Newcastle, 28.5p at 684.5p.

Zeneca, the drugs group, was ruffled by stories that its would-be partner, Astra of Sweden, could be snatched away. Roche, the big Swiss pharmaceutical group, was said to be on the verge of mounting a bid for Astra, a development that would leave Zeneca standing alone and forlorn at the altar. The shares fell 71p to 2,673p.

Sears, on the sale of its credit card business, gained 25p to 310.5p. Retail entrepreneur Philip Green still hovers: he has bid 340p a share although he has not won the backing of the Sears board. WH Smith, said to be expanding its Internet retailing, was 20.5p higher at 537p.

Encouraging trading statements helped Selfridges 6.5p better to 213.5p, Limelight 3p to 33.5p and education group Nord Anglia 14p to 142.5p. IT group Vega was lifted 30p to 485p.

But trading gloom again took its toll: Morgan Crucible collapsed 79p to 183.5p; engineer Cirqual, with sales down 12 per cent and would-be bidders retreating, 68.5p to 134p; scarves maker Yorklyde 20.5p off at 56.5p and tea group Whittard 21.5p to 69.5p. Caution from software group Pegasus lowered the shares 37.5p to 262.5p.

It was ironic that on such a fraught day the Guardian Royal Exchange takeover story was given another whirl. It had little impact on the shares, lifting them just 0. 5p to 337.5p. It was suggested that AXA, the French group seen at the head of the bidding queue, was on the verge of launching a fundraising exercise to back a deal. AXA was said to be raising pounds 1bn, which could tie in with suggestions that it intends to focus on overseas, with the Pru taking on domestic operations. Talk has been that the bid price will be around 400p. GRE is said to have rejected a 360p shot.

Abbot, an oil services group, tumbled 24.5p to 141.5p in late trading as rumours circulated that its proposed merger with Norway's Prosafe group had been called off.

In busy trading AromaScane, the electronic "nose" group, edged forward 0.25p to 10.25p, its highest since a rescue rights issue was made last year. The revamped group, thought to be attracting institutional interest, reports results later this month. KS Biomedix rose 18p to 314.5p in a late response to progress on its osteoarthritis drug.

Wolverhampton & Dudley Breweries, in a takeover tussle with Marston Thompson & Evershed, did itself little good by reporting first-quarter sales below expectations: the shares fell 17.5p to 447.5p.

SEAQ VOLUME: 1.13 billion

SEAQ TRADES: 88,030

GILTS INDEX: 115.98 +0.81

ON-LINE, an obscure little computer games business, says it is not involved in any corporate talks, but even so it is comfortably leading the 1999 stock market race.

The shares climbed a further 12p to 57.5p as against 16.5p on Monday. Two directors, chairman Michael Hodges (50,000) and Clem Chambers (100,000), have each "reluctantly" sold shares to improve liquidity. Two years ago the price topped 100p.

TAKEOVER rumours swirled on the undercard, with T Clarke, a construction group, and Zotefoams, a chemical operation, in the firing line. Clarke rose 14p to 112.5p and Zotefoams 10.5p to 90p. Both shares are well below their best levels.

The rumoured predators were said to be foreign; Clarke, it was claimed, was in the sights of a continental group, while Zotefoams had attracted an American suitor.