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~~~~~((#))016005000x-Stocks & Shares (World)

FTSE-100 ends quarter on bleak note, counting war cost

LONDON: Britain's blue chip shares skidded to their lowest close in two weeks on Monday, ending the first quarter on a sombre note, as anxiety grew over the economic and political consequences of a drawn-out war in Iraq.

The FTSE-100 benchmark index ended down 95.2 points or 2.6 percent at 3,613.3 points -- its lowest close in two weeks. The index lost 8.3 percent over the first quarter and dipped 1.2 percent in March.

Financial stocks accounted for much of the damage as investors weighed up the likely cost of war on consumer demand and company profits.

Volatile insurers were hard hit, with Prudential and Aviva losing more than seven percent. The sector was also dented by negative comment from Deutsche Bank.

"The longer the war drags on, the greater the chances are that the negative sentiment will hit global market activity. And simply put, the risk to global activity equals a risk to earnings," said Nigel Richardson, investment strategist at Axa Investment Managers.

Market watchers said investors were increasingly worried about Syria's role in the conflict after Damascus repeated its support for Iraq.

"What's more, people are already beginning to speculate on the fallout of the war. Rightly or wrongly the market is building in the risk of this somehow spreading across the region."

LOWS MAY BE REVISITED

Dealers said the level of uncertainty over the war in Iraq could lead the blue-chip index back down to the eight-year low of 3,277 visited just before the war started.

"We're right to be in a negative frame of mind. We need the underlying economic data, like unemployment, to get better," said one trader. "Fundamental investors didn't take part in the rally (from 3,277). It was hedge fund driven."

Shares in information group Reuters were among the biggest blue-chip fallers, losing more than seven percent after its US electronic trading subsidiary, Instinet Group, announced another heavy round of job cuts in what investors took as a further sign of weak trading.

On a day of relatively little scheduled company news, SSL International stood out, sinking 12.6 percent after the maker of Durex condoms and Scholl footwear said it would sell its medical division as it struggles with sluggish sales throughout the group.

Dealers said volume, below the daily average at two billion shares, also played a part in stifling trading activity.

"You look at some of these stocks and the volume you see is so low, all it would take is one order to send the shares five percent higher or lower," another dealer said. "I'm staying away."-Reuters