MARKET REPORT - LONDON

WORRIES about the content of the Chancellor of the Exchequer, Mr Gordon Brown's first budget, to be delivered in the House of Commons next Wednesday, returned to cast a shadow over London's equity market yesterday.

But the level of damage to share prices was always limited. By the end of the session most stocks in the privatised utilities sectors, which are bracing themselves for the detail of the long awaited windfall profits tax, had settled on an even keel.

Many managed to make progress on the day. There were casualties, however, notably BT, which was pinpointed in a report yesterday suggesting the company may have to pay up to £1 billion because of the tax.

The market's budget concerns were not confined to the windfall tax on the utilities but once again included the possible changes to ACT and the 20 per cent tax credit on dividends.

Dealers said a move to abolish the tax credit in one go would create extreme turbulence in the market and probably produce a sell off to match or exceed that of the recent retracement by the FTSE 100, which dropped over 200 points, or 4.3 per cent, over a period of six straight sessions.

London was additionally unsettled yesterday by Wall Street's overnight decline which saw the Dow Jones Industrial Average give up a further 35 points. A strong opening performance by Wall Street yesterday provided some encouragement for London.

Over the week, the FTSE 100 index has risen 46.4 or 1 per cent.