Market report: Wednesday close

IT was another hard day at the office for traders following the overnight sell-off on Wall Street, where investors are split over the outlook for the US economy.

Blue-chip shares in London dipped below the 4800 support level with the FTSE 100 falling 56.1 to 4789.4.

But the biggest losses were seen among second-liners, where the FTSE 250 index tumbled 125.0 points to 6828.7 in the face of a fresh retreat on Wall Street this afternoon. Dealers are becoming increasingly concerned by the US Federal Reserve's squeeze on money. One leading London market maker said: 'Volumes have dried up and reduced liquidity is creating volatility in share prices.'

Now that Old Smoothy brewer Jennings has fallen into the arms of Wolverhampton & Dudley Breweries, all eyes are starting to focus on rival Belhaven, one of Britain's last remaining independent beer-makers.

Talk in the City suggests it is when, not if, the St Andrews Ale group gets a bid. A glance at the share price seems to back up the theory. Having endured a helter-skelter ride during the past 10 months, its rise since the start of April has been breathtaking. The shares have climbed almost 90p to a record 520p.

Profit-taking has taken the edge off Belhaven's performance since, with the price today slipping a further 10p to 487½p, giving the Scottish brewer a price tag of £148m.

It raised £25m from shareholders through a one-for-four placing and open offer at 350p last summer to help finance an expansion programme. Last November, it announced a 26% jump in half-year pre-tax profits to £9.7m but admitted that a ban on smoking in Scottish pubs, from next March, would hurt.

Meanwhile, Alternative Investment Market (Aim)-listed Jennings rose 9½p to 417p on the move by Wolves, which dipped 2p to 1038p. Broker Merrill Lynch rates Wolves a buy on the back of a 20-year track record for annual earnings growth of 8%.

The biggest blue-chip faller was B&Q retailer Kingfisher, which tumbled 17¾p to 254½p after its latest trading update. Richard Ratner at broker Seymour Pierce described the update as 'pretty poor' and cut his full-year pre-tax profits forecast from £735m to £675m. 'It just goes to show you how weak the retail sector is in the UK,' he said. 'Trading conditions look set to continue to disappoint.'

The message was not lost on other retailers, with GUS down 23p at 848p, Dixons off 6p at 139p and Halfords losing 18¼p to 278¼p.

Premier League football club Birmingham City rose 2½p to 20p. Managing director Karren Brady has exercised her options and sold 690,000 shares at 22p. She has retained options over a further 685,000 shares. Finance director Roger Bannister has sold 65,000 shares and retained options on a further 165,000.

Estate agent Countrywide dived 32p to 290p after warning of losses in the first quarter. Private investor Simon Cawkwell, alias Evil Knievil, has sold 100,000 shares at 300p and says the price has further to fall. Blue-chip property developer British Land, down 13p at 797½p, has appointed Morgan Stanley as joint broker alongside UBS.

Oil giant BP dipped 11p to 532p as it emerged total proven oil reserves at its Russian joint oil venture, TNK-BP, had almost doubled to 8.02bn barrels last year. The audit was conducted under US Securities and Exchange Commission rules.