Collins Stewart under the cosh

INVESTMENT bank

Worryingly, employees have been heavy sellers of late. At the first window of opportunity following last year's £251m acquisition of inter-dealer broker Tullett Liberty, CST staff have decided to stash the cash. Many want to run.

Rumours that headhunters are all over the firm like a rash are rife. The atmosphere at the group's Wood Street offices under abrasive chief executive Terry Smith is tense, to say the least.

Staff are under constant surveillance and many are said to be fed up with Smith's tough management style.

'You sell your soul when you work at Collins Stewart,' said one former employee yesterday.

Last month, Smith sacked Bruce Collins, chief executive of Tullett. He was upset that Tullett's London operation was achieving lower profit margins than rival ICAP.

Meanwhile, the Financial Services Authority's investigation into the James Middleweek case is ongoing. The former analyst shook the City to its foundations last year by accusing Collins Stewart of serious regulatory breaches. The shares crashed from a high of 493 1/2p to 356p.

Elsewhere, Brewin Dolphin cheapened 2 1/2p to 91p and Charles Stanley 8 1/2p to 227 1/2p. But Evolution advanced 3 1/2p more to a high of 147 1/2p following news that Commerzbank has amassed a 7.51% stake. Close Bros, which owns market-maker Winterflood Securities, firmed 8p to 824p.

The Bank of England's third interest rate hike in six months - up 1/4% to 4 1/4% - had been well expected, but the hawkish comments in the accompanying statement raised the prospect of more 'quick' increases in the coming months.

Combined with ongoing worries about the Chinese economy and the worsening situation in Iraq, it dragged the Footsie 53.3 points down to 4,516.2.

Wall Street dropped 120 points in the early stages as news that claims for US state unemployment benefits fell to their lowest level in about 3 1/2 years, raising expectations that the Fed will hike American rates soon. If today's non-farm payroll ( employment) numbers please, it could be very soon.

Sterling eased to $1.794, while the euro eased to 67.3p and $1.2081.

Slick oils responded to modest buying as the price of Brent crude rose above $37 a barrel for the first time since October 1990, during the first Iraqi war. BP firmed 1 3/4p to 499 3/4p and Shell 2 1/4p to 405p.

Building materials group Titon crashed 32 1/2p to 95p after reporting dire interim results. First-half profits fell 19% to £568,000 due to increased competition and the fact sales growth came from lower-margin product lines.

Security group Bell chimed 57p higher to 171p in response to an agreed cash offer at 175p from Securitas. Chief executive Pat Curran will collect £13.8m.

Following the appointment of KBC Peel Hunt as its broker and news of the planned £3.1m purchase of water soluble packaging company Aquasol, Stanelco gained 5/8p to 6 5/8p on hefty turnover of 12.3m.

Moving to Aim from Ofex following the acquisition of Stochastic Financial Modelling, mechanical controls company Aquilo improved to 2 1/4p, a 28% premium to the placing price of 1 3/4p.

Petra Diamonds sparkled at 53 1/2p, up 1 1/2p, after finding two further diamond deposits at its Alto Cuilo concession in Angola.

Northern Petroleum added 5/8p at 7 7/8p. It has acquired a 4.2 acre site on the Isle of Wight and has submitted an application to drill the area and the Sandhills-2 well.

Nervous selling ahead of next week's interims left Lastminute.com 6p off at 190p and Bluetooth developer CSR jumped 47p to 305p on better-than-expected quarterly results.