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FTSE weakens for 3rd day as oils and drugs retreat

LONDON Britain's FTSE 100 suffered its third successive session of slim losses on Thursday as the market continued to consolidate after its recent gyrations.

Weighed down by weakness in leading oil and drug stocks, the blue chip index, which on Monday rose to its highest close in eight weeks, closed a meagre 15.0 points or 0.2 percent lower at 6,594.6, with decliners in a five to four majority.

Dealers said Wednesday's 3.2 billion pounds sale of stock in Vodafone AirTouch Britain's biggest ever placing in its biggest company, may have drawn some of the liquidity out of the market, helping deprive it of any clear momentum.

"The market's been rather quiet after the gyrations of last week; it's been drifting all day as it suffers a bit from Vodafone indigestion," said one senior equity salesman. "We're taking a pause to consider the next move, because the swings we have seen have been so frightening."

However the FTSE 100 recovered from a midsession deficit of some 70 points, with a firm opening in New York helping pull the UK market higher towards the close.

The Dow Jones average was up 45 points or 0.4 percent by London's 1630 GMT close, while the tech-laden Nasdaq Composite gained 49 points or one percent.

UK equity trading volume reached a moderate 1.5 billion shares by the market close.

Heavyweight oil shares BP Amoco . and Shell weighed on the FTSE 100, delivering 19 points of downside after crude prices eased on news that the U.S. had passed a bill to cut off aid to Opec and other nations on account of strong prices.

Drug stocks exerted a negative influence, taking 13 points off the FTSE 100 as Glaxo and SmithKline both lost around three percent, profit-taking setting in after recent sharp gains.

On the upside, selected technology stocks stood out as the U.S. Nasdaq index, a bellwether for the sector, extended Wednesday's advance. Biotech group Celltech bounced 9.1 percent from recent losses as investors took a second look at Wednesday's results, while Telewest rose 9.3 percent as Merrill Lynch raised to "buy" after the group set out plans for interactive multimedia services.

The day's top blue chip performer was healthcare products company Nycomed Amersham which recovered 9.7 percent from recent losses as it announced European approval for a Parkinson's disease diagnostic product. Elsewhere dealers said the session seemed to have been dominated by investors shuffling portfolios as the end of the first quarter looms. "It's the end of the quarter and people don't want to put on new positions. And they are digesting the Vodafone placing. It was a heck of a deal and people have got to pay for it now," said one dealer.

The FTSE 100 was left struggling to break out of the trading range, roughly between 6,700 and 6,400, in which it has been trapped for much of this month.

Yet some analysts said the index could be poised to break upwards towards record peaks set at the end of 1999, particularly as some investors take the view that a peak of interest rates was in sight.

"The index looks well supported by its 50 and 200-day moving averages (currently around 6,350) and we could see it back to its all-time highs in the next few weeks," said David Liston, technical analyst at money manager Capel Cure Sharp. Among individual UK stocks, shipping operator gained 3.2 percent in the wake of a stock market recovery by U.S. cruise giant Carnival .

Fashion chain Next dived 12.5 percent after results showed that the group's recent stellar sales growth was stalling, while metal processor Bodycote dropped 14.1 percent as in-line results sparked a bout of profit-taking after a recent advance.-Reuters