Market Report: OFT warning adds to pressure on banks

BANKS, particularly the former building societies, suffered sharp punishment as the Office of Fair Trading warned about their treatment of customers.

They were under pressure even before John Bridgeman, the OFT director general, said he intended to investigate complaints against Northern Rock, off 51p at 555p. Negative comments from Dresdner Kleinwort Benson created the early unease. The investment house warned the mortgage war was intensifying and suggested Halifax and Woolwich could lose out.

With niggling worries that the Far Eastern crisis could hold some unpleasant surprises for some of the banking community, the sector could muster few friends on a day the stock market fretted about the possibility of higher interest rates as well as the tiger economies.

Abbey National fell 34p to 1,047p; Alliance & Leicester 20p to 800p; Halifax 11.5p to 776.5p and Woolwich 6.25p to 339.75p. Schroders dropped 58p to 1,915p; Lloyds TSB 32.5p to 861p; Bank of Scotland 28p to 690p and Barclays 24p to 1,1723p.

Ladbroke was again the blue chip front-runner. Shares of the betting and hotel group romped ahead 15.5p to 357.5p, a two day gain of 33p. Closer links with Hilton Hotel Corporation of the US seem to be the spur. HHC promised to buy 5 per cent of Ladbroke, to underline a trading relationship, and two share deals on Thursday awakened hopes the stake build-up had started.

There are also hopes of extensive corporate action, perhaps even a bid for the company.

Footsie spent most of the session in retreat, ending 30.7 points down at 5,917.8. At one time it was off 82. Supporting shares again out-performed their peers. The mid cap index achieved yet another peak while the small cap ended unchanged.

The thought of mega-bids in the telephony industry gave Cable and Wireless a 20.5p boost to 695p and Orange 8.75p to 448.75p. BT, with year's figures next week and talking about US adventures again, fell 4.5p to 645p.

Colt Telecom surged another 145p to 2,085p as Lehman Brothers made positive noises.

Next, where finance director David Keens has warned about continuing difficulties, fell a further 15.5p to 484p. The shares were 835p before doubts set in about trading.

Allied Carpets continued to sap retail confidence, producing a profits warning which sent the shares sliding 47p to 89p. Two years ago the shares were floated at 215p. Its comments left Carpetright looking threadbare with a 23p fall to 337. DFS Furniture also fell 10.5p to 256p.

A profit warning from Stoves, the cooker maker, cut the shares 49p to 158.5p; Crest Packaging dropped 8p to 49.5p after warning about profits.

Rolls-Royce lost 2.25p to 290.75p after confirming a $400m Singapore Airlines order. Billiton, the mining group ended 1.25p lower at 166.75p; there was a late trade involving 100 million shares at 158p.

An upbeat trading statement and support from Credit Lyonnais and Salomon Smith Barney pushed health-care group Nycomed Amersham 60p higher to 2,130p.

Shipbroker Horace Clarkson rose 13p to 130.5p. It rejected a 130p offer from Charles Taylor Group and Howe Robinson Investments.

Prism Leisure was another to collect an approach. It did not lead to an offer. The shares slipped 2p to 68.5p.

But the new bid approach to Trust Motor drove the shares 17p higher to 198p and engineer Headway gained 14p to 57.5p after admitting talks were on.

Reece, a distributor of cycles and industrial fasteners, firmed to 2.5p. Britannia, the construction group, is thought to have topped up its recently acquired 14.9 per cent shareholding. Last year, after stake-building, it took over British Building and Engineering.

Jermyn Investment Properties moved ahead 22.5p to 337.5p after buying ELP Properties from Marylebone Warwick Balfour, unchanged at 13.5p. To fund the deal Jermyn is raising pounds 40m through a placing and open offer of convertible, unsecured loan stock.

JJB Sports jogged 24p higher to 547.5p. Charterhouse Tilney likes the shares, drawing attention to the World Cup and expected kit relaunches by Premiership clubs. Current year's profits are forecast at pounds 43.2m with pounds 51.1m in the following year.

Computer shares lost a little of their strength. But Admiral rose 100p to 1,207.5p and Eidos 40p to 1,100p.

Tracker Network, the car security group, had a splendid run, up 137.5p to a 882.5p peak. It is due to move from AIM to full listing on Monday.

James Fisher, the shipping group, held at 127p. Stockbroker Wise Speke suggest profits will rise pounds 1m to pounds 9.5m this year and pounds 10.4m next.