Fed to pave way for more rate cuts

ANOTHER round of co-ordinated interest rate cuts by the major central banks looks on the cards for next week. Alan Greenspan's Fed is now odds-on to cut US rates by at least a further ¼% next Tuesday, if not before, after a disastrous drop in US consumer confidence to its lowest level since February 1994.

This put paid to the idea that consumers would help save the US economy from a full-blown recession. UK and Eurozone rates are likely to be shaved soon after - maybe a week from tomorrow.

Shares on both sides of the Atlantic fell sharply as investors ran for the exit following the much weaker-than-expected October confidence figure of 85.5 points. Before September 11's attacks, it stood at a buoyant 114 points.

The mood in dealing rooms was already sombre following the FBI's warning of further terrorist attacks on America and possibly Britain. Combined with Argentine debt worries, it put dealers on the defensive from the start.

The Footsie fell 108 points to stand below 5000 when Wall Street lost an initial 203 points, but rallied along with the Dow to finish 82.3 points lower at

5003.6. The dollar weakened again, leaving sterling at $1.4550 and the euro at 62.3p and 90.65 US cents.

3i Group led the retreat, falling 60p to 730p after revealing that its net asset value for the six months to September fell 22% to 631p per share. Fund manager Amvescap lost 67p to 820p.

British Telecom dropped 18 1/4p to 337p. Conditional dealings in mmO2, its demerged mobile phone business, get under way on November 9. Spread betting firm Cantor Index's grey market price was 82p to sell and 87p to buy.

Concern that Argentina may default on its $132bn debt unsettled banks. But Martin Cross at Teather & Greenwood says HSBC (31p down at 737p) has exposure to Argentina of only 0. 7% of its assets. Barclays (45p off at 2035p) has just 0.1% exposure and Lloyds TSB (7 1/2p cheaper at 687 1/2p) 1% for all Latin America. All three have substantial provisions against their exposure.

Still dreaming of a possible £ 5bnplus bid from US retailing giant Wal-Mart, Safeway rose 6 3/4p to 347 1/4p.

Other supermarkets were picked up for their defensive qualities. Morrison firmed 4p to 208p, Sainsbury 7p to 374p and Tesco 2 1/2p to 243 1/2p.

Colt Telecom fell 15 1/4p to 121 3/4p on profit-taking as many punters went off the idea of Cable & Wireless launching a bid. C&W shed 4p at 312p. Video phone group Motion Media cheapened 4p to 59 1/2p. News that chief executive Ken Burgin is taking a year's unpaid sabbatical to pursue charitable interests went down like a lead balloon.

More than 22m shares were traded in Aim-listed children's entertainment company Just Group, a fraction harder at 1.03p. Dealers await the outcome of talks with its advisers about securing crucial short-term funding to support the development of Butt Ugly Martians, its successful cartoon series.

Things turned ugly for Just Group in September when chief executive Wilf Shorrocks and his wife, commercial director Paula, were shown the door following a row with finance director David Newcombe. They clashed over his change of accounting policy.

Business-to-business information services provider WMRC held at 14 1/2p despite Ambient's purchase of a further 2.8m, increasing its holding to almost 59%. Perhaps it will soon bid for the rest.

Profile Media eased 1/4p to a low of 19 1/4p. Charles Scott, chairman of Cordiant and director of Profile, obviously believes it looks dirt cheap. He bought 100,000 at 20 1/4p and 100,000 at 20 3/8p. Revived talk of a management buyout lifted steel distributor Precoat International 10 1/2p to 49 1/2p.Speculative buying on Bolivian expansion hopes lifted Pan Andean Resources 2 1/2p to 11 3/4p.

Aim newcomer Numerica, the accounting and business services group, made a resilient debut. Placed at 100p by broker Collins Stewart, the shares closed at 109p. Bed firm Silentnight lost 13p to 174 1/2p after warning that second-half profits will not be better than the first.

PUNTERS plugged into Thus, one of the UK's leading providers of voice data, internet and call centre services, and the close was 1p dearer at 34p. Rumours suggest that next week's interim statement will feature a refinancing package and details of a deal with BSkyB (15p off at 755p). Scottish Power still owns 50% of Thus and could provide cash to secure the company's future.