Aerospace takes a nosedive

WORRIES over the impact of impending strikes at US aircraft giant Boeing sent UK aerospace suppliers into a spin. Broker Credit Suisse First Boston says industrial action 'would cause enormous damage' to second-half delivery schedules.

Rolls-Royce flew into turbulence, down 5 1/2p to 132p, Meggitt dropped 7p to 182 1/2p and Smiths lost 29 1/2p to 721p.

Boeing enters negotiations with its workforce next month. CSFB estimates a 75% risk of a strike. This would further dent sentiment in a sector hammered by the economic slowdown and the impact of September 11.

Major US airlines are shrinking to meet reduced demand. Some, like US Airways this week, have filed for Chapter 11 creditor protection. This is good long-term because it gets surplus aircraft capacity out of the system, but bad news in the short term for suppliers like Rolls-Royce, which makes higher margins on spare parts and maintenance.

CSFB prefers defence firms, particularly BAE Systems, up 5p to 300p.

Elsewhere the Footsie was in the doldrums, closing down 100.6 at 4171.1. Sentiment was subdued, but should get a lift today after Wall Street surged more than 200 points at one stage. Sterling was trading at $1.54. The euro was 63.8p and 98 US cents.

A raft of heavyweight companies, including several banks and the oil majors, began trading ex-dividend, meaning new buyers will not get the latest dividend. It was the equivalent of knocking around 16 points off the market's value. Oils fell though the crude price hit a three-month high of $26.50.

Credit Suisse, in its Swiss banking guise, upset the bank sector. It reported a much bigger than expected second-quarter loss. Lloyds TSB was 26 3/4p cheaper at 542 1/2p, HBOS off 8 1/4p at 720p and Royal Bank of Scotland down 30p to 1525p.

A two-year worldwide image rights deal with soccer star David Beckham failed to lift Vodafone, down 3 1/4p to 91 3/4p. Beckham's mugshot can now be used in its advertisements, screen savers and mobile phone games.

The gloom in the fragile media sector deepened after an admission by US advertising giant Interpublic of improper accounting. WPP fell 19p to 440 1/2p, Pearson tumbled 30 1/2p to 529p and Reuters lost 12 1/4p to 233p. Granada, also dogged by accounting worries, fell 1 1/2p to 81p, just 1/2p off its all-time low.

Paper and packaging group Bunzl topped the FTSE leaders, up 10 1/2p to 459p. CSFB has started coverage of the stock with a hold rating and 497p target. Airports operator BAA flew 10p higher to 544p, extending Tuesday's gains as the market welcomed backing from its regulator of a more favourable charging structure.

Spirits giant Diageo slipped 2p to 773p as broker Morgan Stanley lowered its price target from 910p to 880p. It is taking a more pessimistic view of medium-term sales growth. There is growing uncertainty over the outlook for 'ready-to-drink' products such as Smirnoff Ice.

Independent News & Media was treading water at 96p. Figures from National Newspapers of Ireland reveal first half advertising for Irish newspapers is down 12%.

Kitchen equipment maker Enodis, the old Berisford, finished up 1 1/2p to 46 1/2p. Director Andrew Allner spent £9,200 buying 20,000 shares at 46p taking his total holding to 27,200.

Veteran investor Jack Petchey upped his stake in hotel group Hanover International from 14.5% to 17.37%. Hanover's board is under pressure from a Bahamas-based investor to put the firm on the block. Petchey is no doubt eyeing the gap between Hanover's assets, worth 224p a share, and its price, unchanged at 120 1/2p.

A deal to buy eight nightclubs in the north of England for £3.3m sent Springwood Leisure up 5p to 102 1/2p. It said trading prospects remain sound.

Tech tiddler Superscape jumped 2p to 26 1/2p on news of deeper ties with ARM Holdings, down 3 3/4p to 150p, covering 3D mobile phone content such as games and messaging systems. Underlining the link, Peter Magowan, previously on the ARM board, joined the board of Superscape.

BRITISH Energy chairman Robin Jeffrey says it faces 'no immediate financial crisis' after this week's shutdown of three reactors. Debt will top £1bn by year end and brokers now fear the dividend may be axed rather than halved. BE dropped plans for a US bond issue last month and needs to try again. Rating agency Fitch did not help by downgrading its credit status. BE fell 4p to 59p with a hefty 22m shares traded.