Market report: Woeful Woolworths on Sugar's shopping list

Friday 10 October - afternoon update

Consumers may be shunning its stores, but Woolworths has still found its way on to Sir Alan Sugar's shopping list.

The Evening Standard revealed last month that the founder of Amstrad computers and star of The Apprentice was thought to be building a stake in the troubled High Street chain.

It was confirmed today that he has snapped up almost 4% of its shares, tempted by their bargain-basement price. They have lost 80% of their value in the last year but Sugar will be among the few investors with a smile on his face today as the shares climbed 0.31p to 3.45p on the news.

The pick 'n' mix retailer has long been considered among the retail sector's walking dead, and this week Woolies' woes were added to with news that credit insurer Coface has joined its rivals in withdrawing cover for the retailer's suppliers.

Takeover speculation has surrounded Woolies in recent months, with Iceland founder Malcolm Walker still thought to be circling the chain, and its biggest shareholder Iranian-born property tycoon Ardeshir Naghshineh rumoured to be interested.

Some in the City considered Sugar's move as further evidence of bottom fishing after billionaire Joe Lewis bought into pubs group Mitchells & Butlers, 10.25p lower at 149.75p. But the search is still on for 17 million shares he snapped up, with Lewis thought to have instructed lawyers to find out where they are.

The shares belonged to Robert Tchenguiz but were being held as collateral by Kaupthing. Talk is that the Icelandic bank was able only to deliver 88 million shares as the remainder had been loaned out to an unspecified party.

The FTSE 100 fell off a cliff again today in a miserable ending to a week the City will wish to forget. The benchmark index plummeted 305.11 points to 4008.69, a level not tested since August 2003, leaving blue-chips down nearly 20% on the week. Trading screens were covered in red, with only one Footsie stock, Eurasian Natural Resources, posting a gains by lunchtime.

Volumes were much lower today, amplifying the effects of the sell-off. It was taken as evidence that many investors have already cut their losses and run, liquidating their assets earlier in the week. Traders noted that the price changes were largely derivatives and not stocks-led.

Reflecting the extent of the panic, banking shares were briefly suspended today. HBOS, the last two days' biggest winner, got the wooden spoon this time, plummeting 33.5p to 120p, while Royal Bank of Scotland sank 16.9p to 79.1p.
Traders in London waited for Wall Street's opening for further direction, praying that the Dow could finally turn the tide after seven consecutive days of losses. Shares suffered their biggest one-day fall in 21 years in New York yesterday as the banking crisis and the fear of global recession hit investor confidence. The Dow ended down 678.91 at 8579.19, the first time it has dropped below 9000 in five years. There is evidence in the US that while investors have been prepared to sit on the sidelines during the past few weeks, they are now liquidating their positions.

Citigroup added to the UK financial sector's gloom with a damning sell note on Schroders, titled Defying Gravity. The City big-hitter notes that its shares have performed relatively well given troubled times, but warns of an 18% drop in revenues this year, and that the asset manager must cut costs. The non-voting shares plunged by 121p to 649p.