Market report: Friday close

PROSPECTS of a rise in interest rates and yesterday's slump on Wall Street saw share prices in London fall to their lowest since the aftermath of last September's terrorist attacks on the US.

Futures-related selling did much of the damage to the cash market, wiping £35bn from the value of Britain's quoted companies. It also left the FTSE 100 index nursing a loss of 141.1 at 4630.8.

Overnight, US punters were unnerved by news of a drop in retail sales. This, they say, suggests the economic revival is not as robust as some experts have indicated.

Yesterday's threat by Bank of England Governor Sir Edward George to raise rates and take some of the steam out of the housing market has also dampened sentiment. Dearer money would make the stock market even less attractive to investors.

For much of the day, BG Group was the only Footsie 100 company showing a rise on the day, but in th end it succumbed to a fall of 9 1/4p to 271 1/4p. Vodafone fell 3 1/2p to 91p.

Meanwhile, the smell of burning flesh wafted through the Square Mile on Friday after City speculators chose to pin their hopes on a bid for the ailing stores group Woolworths.

The shares touched 52p in early trading, then rattled all the way back to 42p before the fall was reduced to 2 3/4p at 45 3/4p.

Woolworths, demerged from parent company Kingfisher last year, has been in talks with toga-wearing retailer Philip Green, boss of his privately owned stores group Bhs. But it seems the sides could not agree on a price and the talks have been terminated by Woolies boss Gerald Corbett.

The City seems to think Corbett would have been agreeable to a cash offer of 60p a share, but Green preferred to reverse into Woolies as part of an all-paper deal. Woolies carries a price tag of £633m while, by Green's estimates, Bhs is worth about £1.3bn.

There is good news for smokers struggling to give up the deadly weed. Biotech specialist Xenova has developed an antinicotine vaccine that is undergoing tests and could prove a big money-spinner.

Shares in Xenova marked time at 51p after it confirmed that phase one trials of TA-NIC have shown the vaccine to be safe after it was tested on 60 smokers and nonsmokers. Xenova medical director Dr John St Clair Roberts told a conference on drug dependency in Quebec yesterday that the vaccine creates antibodies that bind to nicotine and prevent it from reaching the brain, thereby reducing nicotine dependence.

Lloyds TSB was on the slide again today, losing 9p at 664p. This follows persistent claims that the High Street bank will have to cut the next dividend by as much as 25% to conserve cash. Monday's profits warning from Abbey National, down 48p at 810p, has revived City fears that banks need to increase provisions for bad and doubtful debts, which will hit profits and possibly dividends.

Tesco slumped 15p to 239 1/2p after its AGM while rival J Sainsbury lost 23p to 345p after broker WestLB Panmure downgraded from reduce to sell and slashed its target price from 400p to 308p.

Talk of an imminent profits warning left steelmaker Corus 12 1/4p lower at 77p.

The Daily Mail's Geoff Foster on yesterday's trade
World markets, updated every 2 minutes
Every share, updated every 2 minutes
AIM, updated every 2 minutes
techMARK, updated every 2 minutes
Today's gainers and fallers