Probe Hits BAE Shares By Pounds 1.2b

AROUND pounds 1.2bn was wiped from BAE

Systems shares yesterday after the defence giant said it faced an anti-corruption probe by the US Department of Justice.

The launch of the investigation into the company’s dealings in Saudi Arabia caused the blue-chip stock to close 34.5p lower at 407.5p – a drop of 8%, although this peaked at 11% earlier in the session.

The decline for the firm, which has denied anywrongdoing, came alongside losses for thewider Londonmarket after the FTSE 100 Index eased 29.1 points to 6559.3 by the close.

Even though New York opened in positive territory, European investors failed to recover from earlier nerves about the state of the subprime mortgage market in the US, dragging the majority of banking stocks into the red.

The financial sector was also being driven by developments surrounding the takeover battle for Dutch bank ABN Amro. Barclays shares were down 9.5p to 710.5p amid concerns about the cost and risk of an ABN Amro bid

Some of the market’s safer stocks proved attractive for investors, with tobacco company British American up 47pto 1699p and Tate&Lyle ahead 11.5p at 584p.

Telecoms stocks also did well, with Vodafone 2.4p ahead at 160p after reports that the shareholder activist group, Efficient Capital Structures, was again pressing its case for a spin off of the company’s stake in US business Verizon Wireless. BT was ahead 5.5p at 320.75p.

Credit checking and price comparison firm Experian was also higher after announcing a deal to buy a 65% stake in a Brazilian firm for around pounds 600m. Shares were up 11p at 600p as this gave Experian exposure to one of the world’s biggest credit reference markets.

The biggest Footsie riserswere British AmericanTobacco, Tate&Lyle, Experian and BT Group.

The biggest fallers were BAE Systems, Rolls-Royce off 13.5p at 532.5p, Schroders down 31p at 1295p and Tesco off 9.25p at 426.25p.

(c) 2007 Daily Post; Liverpool. Provided by ProQuest Information and Learning. All rights Reserved.