LONDON (ShareCast) - London’s blue-chips ended the week on the crest of a slump, with financials leading the way lower.

Insurer Friends Provident was the worst performing blue-chip on reports that Swiss Life is no longer interested in buying the UK company’s Lombard division. Swiss Life was believed to be the only insurance company interested in buying the division, with only private equity firms now remaining in the race.

Elsewhere in the insurance sector Legal & General, Standard Life and Old Mutual were left nursing heavy losses as sector consolidation hopes fade.

Marks & Spencer was weaker on worries over its trading this year and downgrades from Goldman Sachs and Citigroup.

In contrast, fashion retailer Next, which often moves in step with Marks & Spencer, was firmer after broker Sanford Bernstein said it preferred the stock at present to M&S. Elsewhere in the retailing sector supermarkets were wanted, after Waitrose said sales in the week to 28 June were up 3%. Wm Morrison benefited from a note from Shore Capital hailing its defensive qualities while Sainsbury climbed after the Qatar Investment Authority increased its stake to 26%, but it was sector leader Tesco which notched up the biggest gain of the day among blue-chips.

Lloyds TSB and G4S fell back despite positive broker comment. Blue-blooded broker Cazenove sees Lloyds TSB as a good buying opportunity ahead of the banking group’s interim results at the end of this month, after the bank underperformed its peers in a slumping banking sector in June.

Security firm G4S also gets the thumbs-up from Cazenove, with the broker upgrading the stock to “out-perform” from “in-line”.

Origin Energy has advised shareholders to reject a $13.1bn bid from BG Group. BG replied that "Origin has not yet addressed the very significant risks for shareholders inherent in any alternative proposals to monetise its gas resources."

Miner BHP Billiton has reached an agreement with China's Baosteel on the price for iron ore deliveries for the contract year starting 1 April 2008.

Among second-liners, Bradford & Bingley was sharply lower after leading shareholders stepped in and rescued its £400m fund raising after US private equity group Texas Pacific (TPG) walked away. TPG’s decision was triggered by a rating downgrade on Bradford & Bingley’s debt by credit rating agency Moody’s. The shares trade at about one-seventh of the level they were at this time last year.

Press reports suggest that Resolution, which has previously expressed an interest in investing in the embattled mortgage lender, is no longer interested in acquiring a stake.

Care home group Southern Cross strengthened its board today but the company’s shares were still in freefall following its warning at the beginning of the week of a breach of bank covenants.

Nord Anglia has agreed a bid of 460p per share cash from Baring Asia Private Equity. The offer values the entire issued and to be issued share capital of Nord Anglia at approximately £190m.

Logistics group TDG has agreed a takeover from investment group Laxey Partners on the last day of a put up or shut up deadline issued by the Takeover Panel. Laxey Partners will pay 250p per cash per share, an offer that values TDG in total at £203m. Supply chain solutions company Wincanton , which pulled out of the battle for TDG last month, rose as investors expressed relief at the confirmation it is not considering a counter-bid to the Laxey offer.

Plumbing supplies distributor BSS Group declined after Citigroup downgraded the stock to “sell” from “hold”. Its considerably larger competitor, Wolseley was again one of the worst performing blue-chips on continued fears over the slump in the US and UK housing market.

Vehicle tracking systems specialist Minorplanet lost ground after it rejected a possible 40p per cash proposal from a third party. The group said it believes the offer "materially undervalues" its position in the telematics market and its prospects.

Also on the downturn was mobile data services provider Zamano after it said its performance in the six months ended 30 June was below forecasts due to several factors including the weakness of sterling and the delayed full integration of Red Circle.

Financial software group Gresham Computing said trading has improved “markedly” in the first six months and expects to report a “significantly improved result” for the period.

Irish dairy firm Glanbia said it had a good first half performance overall, with all divisions performing broadly to expectations, as market conditions remained relatively positive.

Irish bookmaker Paddy Power also gained ground after Goldman Sachs upgraded the stock to “buy” from “neutral” and added it to its “conviction buy” list.

Jersey-based home shopping group Flying Brands fell to earth after unveiling costly plans to close down its Greetings Direct business after expansion attempts in the US flopped.

FTSE 100 - Risers
Tesco (TSCO) 359.20p +5.18%
ITV (ITV) 42.60p +3.65%
Morrison (Wm) Supermarkets (MRW) 254.50p +2.83%
Rio Tinto (RIO) 5,600.00p +2.56%
Next (NXT) 873.00p +2.28%
AstraZeneca (AZN) 2,356.00p +1.82%
Xstrata (XTA) 3,764.00p +1.46%
Cable & Wireless (CW.) 155.90p +1.37%
Amec (AMEC) 886.00p +1.37%
Sage Group (SGE) 193.50p +1.20%

FTSE 100 - Fallers
Friends Provident (FP.) 94.50p -6.90%
British Airways (BAY) 197.00p -5.74%
TUI Travel (TT.) 178.10p -5.27%
ICAP (IAP) 470.50p -4.95%
Legal & General Group (LGEN) 94.50p -4.83%
Barclays (BARC) 279.00p -4.45%
Wolseley (WOS) 313.00p -4.43%
Standard Life (SL.) 201.00p -4.40%
Cairn Energy (CNE) 3,000.00p -4.25%
Old Mutual (OML) 88.10p -4.24%

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