Provident to crash out of top flight after week of turbulence

Bombed-out Provident

Financial’s troubles look set to continue with the doorstep lender expected to crash out of the blue-chip index in the coming reshuffle.

Provident’s shares edged down 9.5p to 906.5p yesterday, giving it a market capitalisation of £1.34bn, meaning it is almost certain to drop into the FTSE 250. The sub-prime lender’s shares collapsed last week, dropping 66pc in one day to 589.5p after it issued a second profit warning, ditched its chief executive, cancelled the dividend and revealed it was facing a regulatory investigation.

Almost £1.7bn was wiped off its market value as the shares plunged from more than £17 last Tuesday. Since then they have rebounded somewhat but the gains look insufficient to prevent its demotion, with Gulf region hospital operator NMC

Health set to replace it in the FTSE 100. The prospect of NMC’S promotion failed to impress dealers yesterday, with its shares largely flatlining, off 5p at £26.65. The reshuffle, to be announced today, will be based on last night’s closing prices and comes into effect after the market closes on Sept 15.

The FTSE 100 itself was hardly in rude health either. It closed down 0.9pc to 7,337.43, having fallen as much as 1.7pc to a 16 week low in early trading. Its performance was echoed across European bourses as investors reacted to North Korea’s ballistic missile launch. France’s CAC 40 shed 0.94pc and Germany’s DAX lost 1.5pc. Accentuating the losses was the dollar’s weakness.

“Equities are firmly in the red after North Korea delivered its biggest provocation in two decades,” said Mike van Dulken at Accendo Markets. “The rush for safe havens and ditching of the dollar is resulting in unwelcome sterling and euro strength.”

The biggest loser on the London market was ITV, off 4.9pc at 153p after being dealt a blow by German broadcaster Prosiebensat1. It warned of a flat TV advertising market.

Also heading lower were supermarkets Morrisons,

Sainsbury’s and Tesco, losing 3.7pc, 2.3pc and 1.8pc respectively, in reaction to Amazon saying it would slash prices at Whole Foods, the upmarket grocer it bought. Marks & Spencer, likely to be Whole Foods’ main rival, bucked the trend, up 1.6p to 314.5p.

“I totally agree with the structural threat Amazon represents,” said JP Morgan analyst Borja Olcese. “But it is not a concern in isolation. There is also the rise of e-commerce and the discounters too.”

North Korea’s sabrerattling and the resulting flight to safety meant precious metals were in focus, and Randgold

Resources was the biggest climber on the FTSE 100, up 345p to £79.15.