Britain's FTSE-100 share index closed down 0.5 percent on Tuesday, dragged down mainly by telecoms and insurers, while supermarkets group Morrison fell 5.6 percent on news of dramatically slowing sales growth over Christmas. Mobile phone group Vodafone fell 0.7 percent after new customer numbers in Japan missed even some lowered market forecasts, deepening concerns over Vodafone's performance in Japan, where it trails well behind other players in the 3G market.
Insurers saw Legal & General fall 3 percent and Aviva give up 1.9 percent, eroding some recent gains as investment bank Morgan Stanley cut their ratings, citing a fully valued UK life insurance stock sector.
The main FTSE index closed 22 points lower at 4,818.7, hurt during the afternoon by a sharp early fall on Wall Street and subdued ahead of results expected after Tuesday's US close from chip giant Intel as the latest US reporting season builds up impetus."Intel is why the market's worried today. No market's going anywhere until we hear from Intel. It does need to be good. We want to hear from them that they're seeing semiconductor demand really growing quite strongly," said Hilary Cook, Director of Investment Strategy at Barclays Private Clients.
Barclays Private Clients sees the FTSE 100 at around 5,000 by the end of 2005 and Cook said the FTSE at Tuesday's session high of 4,848 had moved within striking distance of that level in a short time.
"We felt the market had gone too far too fast. At 4,850 that's an awful lot of the year's gains achieved in a very short space of time," she said.
Oil exploration firm Cairn Energy bucked the trend, up 3.8 percent after it said it had made a new gas discovery in India's Rajasthan region, and Rio Tinto added 1.3 percent in a firm mining sector after J.P. Morgan upgraded its stance on the company to "overweight" from "neutral".
Health and beauty retailer Boots side-stepped some of the gloom in the retail sector, rising 2.5 percent on talk of positive comment from brokerage Cheuvreux over Christmas trading. A Cheuvreux spokesman declined to comment.
Boots is due to update markets on trading next week. Dealers said the fact that Boots had not made an announcement ahead of schedule, like some other retailers have recently to meet UK Financial Services Authorities rules about big changes in outlooks, meant their update might not hold any major negative surprises.
"Boots reports a week tomorrow. If they've got a big profits warning coming the rule is they've got to let the market know as soon as possible. If it's a bad one maybe we'd have heard by now," said one dealer.
Asia-focused bank Standard Chartered rose 1 percent to 937-1/2 pence after it placed over 1 billion pounds of its shares on Monday, which were sold at 920p apiece.
Media stocks were mostly higher, with news and information company Reuters Group up 1.8 percent after UBS upgraded its rating on the company to "buy" from "neutral" as part of a review of the European media sector.
Oil services company John Wood was the top-performing mid-cap with an 8.2 percent surge after it said trading was in line with expectations. Dealers said investors were reassured that the weak dollar would not have a big impact and that Wood's problems in its US power market business had stabilised.
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