Banks knock stuffing out of Footsie

FALLS in banks and insurers took the shine off shares. The drops were caused by worries about Argentina's devaluation, coupled with a downbeat survey of financial services and cautious comments from brokers Schroder Salomon and ING Barings Charterhouse. These concerns outweighed reports of a good Christmas on the High Street.

The Footsie slipped 30.2 to 5293.6, despite hopes that the Bank of England will on Thursday decide to leave interest rates unchanged.

Big banks were hit. HSBC fell 8p to 831p and HBOS 6p to 835p after Schroder downgraded both. Schroder is worried about lower earnings per share at HSBC, along with its Argentine exposure. It is also concerned about margins at HBOS as it vies for market share.

Barclays lost 28p to 2274p as ING Barings said 'sell', with 1839p as a fair value target. But the broker helped other banks by playing down their Argentine exposure.

CGNU was on the slide again with a 6p fall to 838p after suggestions that it could cut its dividend to fund expansion.

The life insurance giant says its payout policy is unchanged, but the shares stayed depressed after its broker Cazenove said in the interests of growth 'it would be right to consider all options with regard to the dividend'.

Media giants were also off colour. BSkyB fell 28p to 787p after BT chief Sir Christopher Bland suggested that the telecoms giant might heat up competition by entering the broadband TV market.

EMI shed 10p to 380p as the entertainment group denied that it has resolved the problem of Mariah Carey's recording contract with an agreed payoff-of £35m. Rumours of such a payment followed disappointment when her album Glitter sold a mere 2m copies.

Fashion group Alexon, with its Bay Trading and Envy outlets to the fore, spread Christmas cheer with a 15% rise in sales over the festive season, accompanied by a forecast of a sharp rise in annual profits from £12m to £23m. It shot up 16 1/2p to 193 1/2p, with Numis Securities rating it 'still good value' and predicting 'a positive Xmas performance from the rest of the fashion sector'.

Nightclub and bar operator Chorion, firm at 26 3/4p, reported 'another highly successful December' with sales up 4.4%. For good measure, its business has not been hit by the disappearance of tourists since September 11. Branded crockery bearing the mark of omnipresent wizard Harry Potter boosted Churchill China over Christmas and helped to put profits 'well ahead'. It jumped 18 1/2p to 174 1/2p.

Broker recommendations also provided some upward momentum. Hilton Group rose 3p to 228p after a hotel circular from broker UBS Warburg upgraded its shares from 'hold' to 'strong buy' and they were joined by Six Continents, the former Bass, which added 21p to 736p, also on a 'strong buy' recommendation.

Invensys - the biggest riser in the Footsie over the past three months, with a 200% gain - was again in demand, rising 3p to 134p after it confirmed it has sold its Energy Storage Group for £360m to cut debt.

Cookson Group rose 5p to 102p after a report that it has received informal approaches for its precious metals business. The division could be worth £300m to £400m.

An upbeat trading statement boosted Carillion, with the construction company rising 11p to 156p.

Fast-growing exhibitions contractor Mice Group added 3p to 77 1/2p after news of a major contract with Ford and a £30m takeover of a virtual reality exhibitions company that will give Mice £25m cash to expand further.

SkyePharma rose 6p to 74p after disclosing an £8m deal to develop a new inhaler for AstraZeneca's Pulmicort asthma drug.

Billing services and database management firm Microgen climbed 14p to 117 1/2p after the company said it expects full-year profits at the upper end of expectations of 'not less than' £1.3m.

WATCH Bell Group, the security systems company, shot up 12 1/2p to 95p. That followed the award of a ' forger-proof' national identity card contract for Bell's smart card software arm. ABN Amro tips Bell as this year's 'best smallcap play on electronic security'. The broker forecasts a strong rebound in profits from last year's setback and expects earnings growth of 14% in 2002-3, putting the shares on a 16-times rating.