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LONDON (Thomson Financial) - Leading shares closed weaker with Wall Street remaining lower on interest rate jitters and Enterprise Inns down in the blue chips ahead of the July 1 smoking ban.
By close, the FTSE 100 index was down 28.6 points at 6,567.4, while the FTSE 250 index was 3.3 points weaker at 4049.5.
Volume was fair, with 2.59 bln shares changing hands in 496,448 deals.
'It's been a lacklustre week in the market, we are more worried about what may come through next week, particularly in the US property market, with US new home sales, US consumer confidence as well as UK mortgage approval data all due out next week,' said David Scott, senior stockbroker at Redmayne-Bentley.
Across the pond, Wall Street continued its downward trend as interest rate jitters and fears about mortgage failures hitting the financial sector offset the splash from the Blackstone Group's debut on Wall Street.
By London's close the Dow Jones Industrial Average was down 57.4 points at 13,488.5 and the Nasdaq was 12.82 points lower at 2,604.14.
The broad-market Standard & Poor's 500 index dipped 9.03 points to 1,513.16.
Back in London, Enterprise Inns was the top Footsie faller, down 18 at 674, as investor caution builds ahead of the smoking ban in England and Wales, which comes into effect on July 1.
Evolution Securities also downgraded Enterprise Inns to 'reduce' from 'add'.
Its peers were also lower, Punch Taverns fell back 15 at 1,276-1/2, while mid cap group Greene King was down 16 at 1,002-1/2.
National Grid gave away 13 pence to 719-3/4 after Goldman Sachs cut its stance in the energy provider to 'sell' from 'neutral'.
Elsewhere, Barclays fell 9 pence to 719-3/4 after the Telegraph and Times reported that the bank is facing concerns over its exposure to two Bear Stearns hedge funds facing collapse.
Sources told the Daily Telegraph that the investment banking arm of Barclays may have lent the funds some 1.2 bln usd, far more than was originally thought. The loans were linked to the lower tier 'sludge' category of sub-prime mortgages, which are most at threat from rising default rates in the US.
However, Barclays said any loss resulting from its exposure to funds that have invested in US sub-prime mortgage assets will not be significant.
Royal Bank of Scotland, the major player with Barclays in the ongoing M&A struggle over ABN Amro, also fell today, down 6 at 634-3/4.
Turning to the blue chip upside, shares in major supermarket chains were in demand.
Tesco was up 2.07 pct or 8-3/4 pence at 430-3/4, bouncing back having lost nearly 5 pct earlier in the week amid numbers which didn't quite meet analysts' forecasts, with one London-based trader saying the midweek sell-off was an overreaction.
Morrison moved up 5 pence at 292 as investors see it as more of a short-term solution than Tesco.
Elsewhere, Pearson was around 11-1/2 higher at 836 following news that exploratory talks with GE over a possible bid for Dow Jones had ended, prompting UBS to reiterate its 'buy' rating.
BAE Systems also rose, up 5-3/4 pence to 428-3/4, following news it has been granted approval for the acquisition of Armor Holdings by the Committee on Foreign Investment in the US, paving the way for deal closure in the third quarter 2007, following anti-trust and shareholder approval.
Morgan Stanley said the speedy CFIUS review supports its stance that a full-blown investigation by the DoJ into BAEs historical dealings with Saudi Arabia is now unlikely. And with completion of the Armor deal now largely assured, it thinks MRAP vehicle contract awards, a strong first-half 2007 result, and Saudi contract signing are the key drivers that should drive the stock to its 530 pence price target.
M&A rumours gave Unilever a boost, up 24 to 1,564, after talk that Kraft was building a stake in the Anglo-Dutch food producer.
On the second line, on the downside, exploration groups fell back following softer oil prices.
Premier Oil fell back 24 at 1,083, Dana Petroleum was 31 lower at 1,131 and Tullow Oil was 9 weaker at 479-1/4.
Turning to the upside, M&A activity helped shares in Weir Group gain 19 or 2.71 pct at 720-1/2 following yesterday's announcement of the acquisition of SPM Flow Control.
Bridgewell upgraded the group to 'buy' from 'overweight'.
Stagecoach Group added 3 at 169 after being awarded the East Midlands franchise with Panmure Gordon reiterating its 'hold' stance and price target of 175 pence.
And finally, Morgan Sindall edged up 13 to 1,518-1/2 after ABN Amro reiterated its 'buy' stance and raised its price target to 1,766 pence from 1,520. tf.TFN-Europe_newsdesk@thomson.com jf/rfw COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
© 2007 AFX News
