UK shares plunge after Wall Street slide

Leading UK shares today fell sharply at the opening following Friday's 193-point drop on Wall Street.
The FTSE 100 was off 71.1 points, or 1.7%, at 4,004.4 after the Dow Jones industrial average lost 2.2% at the end of last week amid growing concern about the US economy. Official data showed that the world's largest economy only grew 1.1% in the second quarter, much less than expected.

Banks took an early hit with Abbey National down 3% and Lloyds TSB down 2.4%. The banking sector has come under pressure as banks have reported a sharp rise in bad loans. HSBC today reported an increase in bad debt provisions to $715m (£457m), $274m higher than a year ago. Pre-tax profits for the first half came to $5bn, down 7% from a year ago. Last week, Barclays reported a 43% jump in bad loan provisions in the first six months of the year.

Oil stocks were also lower, while food retailer Tesco slid 1.2% despite saying in a statement that it expected to meet market expectations during the first half of its financial year. Tesco's first-half results, for the period to August 10, are due on September 17. Analysts are expecting profits of around £1.3bn for the full year.

Along with its rivals, Tesco experienced a slowdown in sales growth in its first quarter as consumer spending came off the boil following a prolonged period of strong growth.

British Airways, which reports traffic figures later today, rose after it reported solid first-quarter profits. Although BA downgraded its outlook for the year, better than expected profits indicated that the airline was over the worst after a sharp slump in the industry in the wake of the September 11 attacks.