Hargreaves Lansdown, the stockbroker that floated last May at 160p, dropped below its launch price yesterday amid fears that it would issue a warning on growth with its first-half results due today.

The shares fell 9¾p to 158p as Investec reiterated its “sell” advice, saying that it expected the weak stock market to hit its flow of funds from investors. It said that its forecast target for the year to end-June of £12.8 billion under management looked challenging given that the market is off 10 per cent this year.

Resolution was the worst blue-chip performer, down 44p at 672p, hit by worries that the 720p-a-share takeover by Hugh Osmond’s Pearl Assurance could be scuppered at the eleventh hour by the Financial Services Authority. The watchdog was unhappy with the speed at which Pearl wanted to sell capital in Resolution’s life funds to repay its creditors. Pearl said that it would need another three weeks to try to convince the FSA, but one sector-watcher said: “This is clearly a major issue that could scupper the whole deal.”

The FTSE 100 fell 76.3 to 5,707.7 on renewed worries over the value of mortgage and credit card-related derivatives that banks and insurers hold. American International Group, one of the world’s biggest insurers, said that auditors had concluded that there was “material weakness” in internal controls over valuing its credit derivative portfolio and that it was unable to quantify losses for the fourth quarter.

This sent insurers and banks, already on the slide after warnings by G7 finance ministers at the weekend, into a new spin. Old Mutual, the South African insurer already beset by concern over South Africa’s economy, was off 6.9p at 116½p. Aviva, Norwich Union’s owner, was off 28½p at 551p, Prudential lost 23p to 583p, Royal & SunAlliance was down 5.8p at 124.6p, Standard Life fell 7½p to 198p and Legal & General lost 5.1p to 120.1p.

Standard Chartered, down 47p at £15.20, added to the gloom by revealing that administrators would have to be called in to its Whistlejacket Capital SIV fund. Falls in the value of its credit card and student loan-backed debt meant that it had breached bank covenants. Alliance & Leicester, the mortgage lender seen as one of the most exposed to tightening credit, lost 27p to 580p. HBOS fell 22p to 636p. HSBC was down 24½p at 712½p and Lloyds TSB fell 12½p to 404p.

Traders heard talk that Chinalco was about to lift its Rio Tinto stake from 12 per cent to 20 per cent, but others were sceptical since it has to gain Australian regulatory approval to go beyond 15 per cent.Riowas off 92p at £52.40.

Berkeley defied a flat housebuilding sector, climbing 45p to 995p, after Goldman Sachs raised it from “sell” to “neutral”.

FKI rose 5¾p to 70½p, just above its 70p offer from Melrose, on reports that Blackstone might offer 90p to 95p. This fed speculation of a private equity bid for fellow mid-cap engineer IMI, up 13¾p to 380¾p.

— New York: Stocks ended higher in an uneasy session as shares in retailers and homebuilders rose on expectation of more cuts in interest rates but banks and insurers fell amid fears of more mortgage debt troubles. The Dow Jones industrial average closed up 57.90 points at 12,240.00.

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