Footsie nosedives in wake of disaster

STOCK markets have been in fear of possible retaliatory terrorist action since Allied forces began bombing the Taliban in Afghanistan. Panic broke out on Monday as dealers heard of the American Airlines Airbus crash in Queens, New York, near JFK airport.

Shares plummeted as the market awaited the possible confirmation that terrorists were behind the incident which killed 255 on board and devastated a residential area.

Around 20 points lower just before the crash, the FTSE 100 nosedived 178.9 before regaining some composure to close 98 down at 5146.2. With the bond market closed for the Veterans Day holiday, the Dow Jones Industrial Average dropped 198 points and was 165 down at London's close. It narrowed its loss as first reports indicated the crash was more likely to have been an accident than a terrorist attack.

Airline stocks throughout Europe were heavily sold, as they were immediately after the catastrophic events of 11 September. British Airways touched 145p before closing 11 1/4p off at 161p on turnover of 44m shares. Airport operator BAA, which had earlier announced a 12% fall in passenger numbers in October, lost 28p to 564p.

Discount airline groups Ryanair was dragged 12p lower to 749p and easyJet 11 1/2p to 402p. TBI, which owns Luton airport, cheapened 3p to 51p. Aircraft engine supplier Rolls-Royce dipped 10 1/4p to 158 3/4p.

Package tour operators, which have suffered a sharp deterioration in bookings post-11 September, fell after a firm start. Airtours, which had risen 5 3/4p initially on revived suggestions that it may yet be allowed to bid again for rival First Choice, touched 181p and ended 2 3/4p easier at 190 1/2p. First Choice finished unchanged at 109 1/2p.

P&O Princess declined 17 1/2p to 250p. Fears that the American Airline crash could put some Americans off long-haul flights for good left hotel group Hilton 4 3/4p lower at 187 1/4p and Six Continents 18 1/2p down at 638 1/2p.

Lloyd's brokers retreated on worries of further heavy compensation claims. Cox Insurance fell 7 1/2p to 122 1/2p, Kiln 3 1/2p to 53p and SVB Holdings 4p to 47 1/2p. Among heavyweight life companies, Legal & General shed 5 3/4p to 157 1/4p, Prudential 32p to 761p and CGNU 10p to 857 1/2p.

Elsewhere, Regus, the largest UK provider of office space, soared a further 9 1/2p to 45 1/2p. Buyers got stuck in on further consideration of founder and chief executive Mark Dixon's recent heavy share buying and Friday's reassuring statement. Dixon told City disbelievers that his company's survival was 'no longer in question'.

Provalis jumped 4 1/2p to 16p after its Glycosal diabetes test was granted clearance from the US Food and Drug Administration for prescription home use. Eurasia Mining firmed 3 1/2p to 17 1/4p. Speculators dug in on positive drilling news from the Vissim licence area in Russia where it has recovered highgrade chromite.

Household goods group Sherwood retreated from the day's best level of 13 3/4p after it denied that a management buy-out was on the agenda. The close was 1 1/4p better at 1 0 1/4p.

Healthcare company Medical Solutions closed a sickly 9 1/2p down at 14 1/4p. Investors bailed out after hearing that earnings for the year to end-December will be significantly below market expectations. It blames reorganisation of its Adams Healthcare production facilities and slower-than-anticipated sales growth in the Cancer and Pathology division.

Details of the planned merger of its six regional construction divisions into a new company to be branded Blueston helped builder Morgan Sindall rise 10p to 385p. Mortgage finance group Kensington rose 6 1/2p to 224p after an extraordinary general meeting approved share buy-back plans.

Engineer FKI lost 5 3/4p to 176 3/4p after broker Credit Suisse First Boston slashed its 2002 pretax profit forecast by 68% to £100m and its target price by almost 16% to 190p.

Aim-listed Epic, the online learning group, firmed 4p to 83 1/2p following an upbeat annual general meeting. The company has maintained a stable order book during the last two months.