Pru procrastinates but sellers do not

Worries about the state of the insurance industry after sector heavyweight Prudential refused to commit to its dividend compounded the gloom caused yesterday by the worst set of US consumer confidence figures for almost 10 years.

The FTSE 100 index ended down 80.3 points at 3,621.5. Volume at 2.5bn shares was bloated by Prudential, the day's second most traded stock - behind Vodafone, down 2.75p at 113.25p. A total of 103m Prudential shares changed hands.

While Prudential's annual results came in slightly better than expected, helped by outperformance in Asia, the company's decision to dump its promise to increase dividends sent the stock lower.

In a market already jittery about insurance stocks the company's poorly handled decision to hold off making a decision on its dividend until the summer left the stock down 69.25p at 323.75p, the day's biggest loser on the FTSE 100.

The news about Prudential's dividend knocked shares in Aviva, 21.75p lower at 383.5p, ahead of the group's results today. Legal & General lost 8.25p to close at 66p while Royal & SunAlliance eased 7.25p to 71p.

Among other financial stocks, a record loss at Credit Suisse sent investors scurrying for the exit. Lloyds TSB dropped 12.5p to 379.75p.

HBOS found itself one of two companies in the FTSE 100 to show any gains. It added 31.5p to 621p after the company's annual profits report reinforced the bank's strong position among mortgage lenders.

The other gainer was Amersham, 1p higher at 474p ahead of the health care company's results today.

Elsewhere in the FTSE 100, Diageo lost 8p to 623p after Goldman Sachs warned that momentum across many of its markets and brands may be slowing, except for some of the brands acquired from Seagram. Fears that Rolls-Royce could be forced into a cash raising exercise knocked the shares 2.75p lower to 76.25p.

Media stocks headed south on fears that the advertising market will continue to underperform. The slowdown in consumer spending coupled with worries about impending war with Iraq continue to depress advertising sales, according to some. BSkyB was 20p lower at 612p, with EMAP down 27p at 708p.

Granada eased 4p to 53p, while Carlton Communications was down 6.5p at 88.5p, despite some generally positive comments from Morgan Stanley about the threat to ITV posed by the Freeview digital platform.

Initially the broker had feared that ITV1's audience share had grown only slightly in homes with a Freeview box. On closer inspection, Morgan Stanley's media team admitted, the figures used for that analysis did not take into account the fact that less than 50% of TV viewing in Freeview homes is through the digital box.

In fact ITV1 takes 5.5 percentage points more share in Freeview homes than it does in households with cable or satellite. But, the broker warned, ITV1's audience share will be hit as the number of digital households increases.

Within the media agency sector, WPP continued the slide triggered by Monday's results as UBS Warburg dropped its target price for the stock to 345p from 365p.

Analysts also took a chunk out of software group Sage, sending the stock down 3p to 128.5p. Lehman Brothers reduced its share price target and profit estimates for the group.

Although Lehman estimates that Sage is trading at an unfair discount to its peers and that worries about the potential impact of Microsoft on its business have been overdone, news that the broker has cut its 12-month share price target to 190p from 220p was enough to drop the stock .

Also suffering the effects of a drop in target valuation was Chubb, as the team at Credit Suisse First Boston reduced its estimate to 97p from 145p and trimmed 13% from its earnings forecast for the current year.

Staying outside the FTSE 100, shares in Enodis dropped a further 3p to 37.5p as rumours circulated that an institutional investor has been left holding on to 8m shares in the company after being beaten to the market by two rivals who also had stock to offload.

Among the smaller stocks, Domino's Pizza gained 3.5p to end at 98.5p after the group revealed what it termed a record year in 2002, with like-for-like sales up another 10% in the first six weeks of 2003.

Luke Ahern at Seymour Pierce warned clients that the rating on the Domino's stock price looks rich and with a share price valuation of 100p all the upside looks factored into the price.

Finally, Rolfe & Nolan gained 2.5p to 105.5p as venture capital group Navora said it might bid for the software and services company and trump the 100p-a-share management buyout offer which is currently on the table.

Thorntons rush

Confectioner Thorntons gained ground yesterday, proving yet again that when everything is going wrong, chocolate can be relied upon for a rush.

Amid a sea of red, Thorntons added 3p to 120p after interim results showed a 10% profits rise to just under £11m.

The company has been undergoing a transformation, widening its appeal and product portfolio away from its traditional market of truffles. In the two weeks before Valentine's day, for instance, it shifted 70,000 boxes of its new Eden range containing delights such as Grand Passion and Forbidden Fruit.

Thorntons hopes the range will help attract slightly younger professionals. It is expecting great things from the Eden range over Christmas. But in the meantime, the Mother's day season will be another test for the brand.

Rhys Williams, analyst at Seymour Pierce, reiterated his "buy" stance on the confectioner after the group's results presentation, saying the company has "a compelling growth story".