TMTs continue to drag Footsie down

London's equity market staged a fighting rearguard action for much of yesterday, recovering from an early bout of weakness and nudging into positive territory around lunchtime, only to run straight into another series of further blows from a flagging TMT (technology, media and telecom) arena.

And worryingly for a market bruised by worries of a sharp slowdown in the US economy and battered by a series of confidence sapping US profit warnings and broker downgrades over recent weeks and months, London stubbornly refused to respond fully to a rallying cry from Wall Street.

US markets, after a brief bout of initial jitters, staged a determined recovery before London closed. The Dow Jones Industrial Average, down 20 points initially, pushed up to post a three-figure gain and the Nasdaq Composite, which dropped below the 2,300 level early on, was up around 80 points at the same time.

The worries about the pace of the slowdown in the US economy increased with news of a final downward revision of third-quarter US gross domestic product from a previous estimate of a 2.4 per cent to 2.2 per cent, the lowest in four years.

There was plenty of action on the takeover front with ENI of Italy trumping Amerada Hess's bid for Lasmo, the oil exploration group, and Germany's Vaillant launching an agreed bid for Hepworth, the building materials and heating appliances group.

But it was the latest numbing weakness in TMTs that left the FTSE 100 on its knees again. Telecoms were the real culprits, Vodafone alone accounting for getting on for 30 FTSE 100 points.

The FTSE 100 finished the day a net 61.2 lower at 6,115.5, having dropped to a session low of 6,083.7 at worst.

It was not all bearish news for London, however. In their latest asset allocation note, entitled "Time to return to equities", Mr Bob Semple and Mr McBain at Deutsche Bank said: "Despite the prospect of continued earnings downgrades, we believe that valuations have now moved in favour of equities." -