Share prices dip to lowest this year

LONDON share prices dipped to new lows for the year yesterday as stock markets round the world lost ground and news emerged of a further drop in confidence among British consumers.

The FT-SE 100 index of leading share prices collapsed by 64.8 points at one point, recovering in the afternoon to close 28 points lower at 2,403.7. It has fallen 12 per cent since it peaked in May.

UBS Phillips & Drew, the securities house, contributed to the gloom by slicing its forecast for the FT-SE 100 at the end of this year by a hefty 10 per cent to 2,700.

Mark Brown, UBS equity strategist, said: 'I have stuck with it (his 3,000 forecast) for too long, and have cut to a level to which we see value.' However, Richard Smith of Henderson Administration, said: 'I am inclined to think we have seen the low for the year.'

The Tokyo stock market took a further plunge yesterday, as investors gave a thumbs down to Friday's rise in the German official discount rate. The Nikkei 225 stock average, which had fallen by 439 points on Friday, fell another 664 points yesterday to close at 15,884. Hong Kong shares were also sharply lower, as were most European markets with Frankfurt's market index falling by more than 3 per cent.

Central bank intervention in support of the dollar helped restore some calm to Wall Street, where the Dow Jones Industrial Average plummeted 47 points in early trading. It recovered in moderate afternoon trading to close 28.64 down at 3,303.00.

At home, confidence among consumers has fallen to a four- month low, threatening a further downturn in high street spending, according to a survey carried out by Gallup for the European Commission.

The Bank of England also reported that the narrow measure of money supply M0 - normally seen as a good indicator of high street spending - showed its sharpest drop in June for more than a decade. This followed a Confederation of British Industry survey suggesting that the small post-election revival in retail sales had 'fizzled out'.

Official figures for June retail sales, due tomorrow, are expected to show a 0.1 per cent rise on the month, a third of the size of the increase seen in May.

For the first time since February, more consumers expect the economy to deteriorate in the coming year than to improve, the Gallup survey shows. In May more than twice as many consumers had expected the economy to get better in the coming year than thought it would get worse.

The only glimmer of hope in the survey was a rise to a three-and-a- half year high in the number of consumers believing now is a good time to buy expensive items.

June's sharp fall in M0 almost halved the annual growth rate in the narrow measure of money supply - largely notes and coins - to 1.3 per cent. Growth in M4, the broader measure of money supply that also includes bank and building society deposits, was also weak, leaving the annual growth rate at its record low of 5.2 per cent.

John Major met building industry leaders, who warned him about dire conditions in the industry. The Prime Minister said he would consider proposals 'within the context of keeping firm control of public expenditure'.

----------------------------------------------------------------- FT-SE 100 FORECASTS ----------------------------------------------------------------- Forecasts for the FT-SE 100-share index at the end of 1992 Forecast at Forecast Change start of '92 now BZW 2,900 2,750 -150 James Capel 3,000 2,850 -150 County NatWest 3,000 2,800 -200 Hoare Govett 2,900 2,800 -100 Kleinwort Benson 3,100 2,850 -250 Nomura 2,500 2,500 0 UBS Phillips & Drew 3,000 2,700 -300 Smith New Court 2,800 2,750 - 50 SG Warburg 2,900 2,750 -150 -----------------------------------------------------------------

Hamish McRae, page 21

View from City Road, page 23

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