One bright spot in the gloom: drinks group Diageo is on the way up after a positive note from Lehman Brothers.
The bank has upgraded the Smirnoff-to-Guinness group from equal weight to overweight, and raised its price target from £11.50 to £12. It reckons there could be even more value if Diageo merges with a brewer.
It says: "This is now our preferred large-cap stock in the sector as we see strong defensive characteristics in uncertain markets. We expect the company to meet its 2008 guidance of 9% earnings growth; we raise our target price to reflect potential currency upside from a weaker sterling.
"However, our previous work on a potential total beverage alcohol merger with a beer company suggests a further 250p of upside if such a move were to occur."
Overall the market is all over the place. Early falls were limited after Wall Street opened higher, but poor figures from chip maker Intel rekindled recession fears, and the US market headed downwards again. A large rise in US inventories also suggested a slowdown in the economy, and left the oil price lower.
Miners are now the main drag on the FTSE 100, which is 62.1 points lower at 5963.5. Eight of the top 10 fallers are from the mining sector, hit by a drop in metal prices.
