Another Fed cut but Footsie's still sleepy

NEITHER ultra-low American interest rates nor the strong possibility that the Fed will shave another 1/4% off early in the New Year to revive the recession-hit US economy could awake the London market from its slumber.

The overnight 0.25% reduction to 1.75% made the year's total easing an unprecedented 4.75%. But Wall Street was underwhelmed and flat. So was the Footsie. It lost an early 20-point gain to close 40.8 off at 5120. Sterling rose to $1.4450 with the euro hardening to 61.93p.

A surprise downbeat trading statement from Merck gave the pharmaceuticals sector an early headache. The giant group said profits will not grow next year, partly because of competition from generic drug-makers.

AstraZeneca was sold down to 3026p before closing 47p lower at 3073p. AZ makes ulcer drug Losec, which Merck helps to market in the US. Shire Pharmaceuticals fell 49p to 849p, Celltech 47 1/2pto 840 1/2p. After falling 35p, GlaxoSmithKline recovered to close unchanged at 1745p.

Oftel's decision to ask the Competition Commission to investigate the pricing of calls to mobile phones prompted selling of mmO2, 4 1/4p off at 87 1/4p. Orange said it will fight the decision and edged up 1p to 625p. Vodafone cheapened 2p to 179p.

Marconi rose 2 1/2p to 49p on heavy turnover of 112m after teaming up with BT to create a network of multimedia payphone terminals.

Buoyed by reports of bumper Christmas sales of CDs and hopes that Alain Levy, new chairman of its recorded music division, will make profits sing, music giant EMI rose 11p to 361p.

Drawing strength from an encouragingtrading statement from Debenhams (19 1/2p higher at 374 1/2p), Marks & Spencer jumped 10 1/2p to 350 1/2p on hopes for a good Christmas and New Year. House of Fraser held at 86p following news that HBOS has bought 7.3m shares, or 3.1%.

Toy shop Hamleys,which is obviously hoping to benefit from demand for Harry Potter and Lord of the Rings merchandise, gained 8p to 117p.

Aberdeen Asset Management rose 16p to 385p following a £100m placing of 5.875% convertible bonds. It is buying the Isle of Man business of Old Mutual Securities and related companies for £36.15m.

A Deutsche Bank recommendation and rise in the target price to 175p from 150p helped support services group Mitie gain 6p at 155p.

TBI edged up 1 1/2p to 57p after releasing higher traffic figures for its Belfast and Luton airports and signing a seven-year deal with Britannia Airways, which will bring the airline back to TBI's Orlando Sanford airport in Florida.

A strong buy recommendation from Teather & Greenwood's industry guru, Nigel Popham, helped Belhaven Brewery froth up 7p to 249 1/2p in the wake of a rise in interim profits to £5m, with dividends up to 3.2p.

Internet company Affinity, which has soared since appointing Collins Stewart as its stockbroker, jumped a further 47p to 316p. Now we know why. CS has placed 2.7m shares at 243p, raising £6.3m. Chairman Terry Plummer and chief executive Wayne Lochner sold 500,000 shares apiece at 241 7/8p, but still retain 18.9% and 18.5% respectively.

Aim-listed film distributor Winchester Entertainment advanced 7p to 158 1/2pfollowing the appointment of Leslie Hill as executive chairman from January 2. He is currently non-executive chairman of the ITV Network and a director of Carlton.

Pura, the old Acatos & Hutcheson food processing company, improved 3 1/2pto 77 1/2p on vague talk of a management buyout.

Chief executive Stephen Warshaw's purchase of 100,000 shares at 19 1/4phelped media group ITE firm 1 1/2pto 21p.

Confirmation that it will replace GKN (1p off at 284p) in the Footsie on December 24 left P&O Princess Cruises unimpressed at 367p, down 12p. Punters are still hopeful that Carnival Cruises of the US will soon scupper P&O%'s friendly £4.17bn merger with Royal Caribbean.