The collapse of the $175 billion merger between SmithKline Beecham and Glaxo Wellcome was expected to send shares into freefall today with market strategists predicting that the blue-chip Footsie index will fall at least 150 points by the close of trading and to around the 5400 level, possibly by the end of this week.

The two pharmaceutical giants represent about 8% of the FT-SE 100 and have been responsible for a 15% rise in the index since the merger was announced on 30 January.

Their planned get-together gave confidence to merger speculation in the financial sector to push blue-chips shares to a record nine new highs since the beginning of the year. Strategists believe at least four of those were a direct result of upward movements in SB and Glaxo Wellcome shares. One said: "This announcement has come as a complete shock to the market. It could signal the end of the bull run which w have enjoyed since the end of October last year.

"It could trigger the Stock Exchange to take action to prevent share prices falling by suspending trading for a period."

The collapse of the proposed deal was expected to affect other pharmaceutical shares and even the financial sector, which represents 30% of the Footsie, where there has been huge speculation about mergers.

* Deadly tornadoes hit Florida: At least 30 people were killed and hundreds of homes and businesses destroyed by tornadoes that ripped through central Florida late Monday and early yesterday.

As many as 12 tornadoes tore through Central Florida, spawned by the southeastern edge of an El Nino-related storm system covering much of the South and Midwest.

Helicopters with infrared tracking scopes searched for victims buried in the debris of collapsed houses and overturned mobile homes.

* Ruby Ridge ruling upheld: The US Supreme Court yesterday let stand a ruling that said federal agents at the deadly 1992 siege at Ruby Ridge, Idaho, were not immune from civil claims they lied about events at the shootout.

The case stems from the fatal confrontation at the home of white separatist Randy Weaver. The FBI's "shoot to kill" policy led to the death of Weaver's wife and the serious wounding of his long-time friend, Kevin Harris, who sued 13 federal agents for their actions.

* Court upholds 'Megan's Law': The US Supreme Court yesterday let stand the nation's first "Megan's Law" which allows the names and addresses of sex offenders to be made public.

The court refused to hear arguments that the New Jersey law inflicts an unconstitutional extra punishment on sex offenders who have already served prison terms by notifying the community the individuals are living in the area.

The law was enacted after the abduction, rape and murder of seven-year-old Megan Kanka in 1994.

* Blast rocks Irish talks: Northern Ireland's troubled peace process suffered a fresh setback yesterday when a large car bomb devastated the Portadown town centre. The explosion came as Northern Ireland peace talks resumed in Belfast without Sinn Fein, suspended for 17 days because authorities say its Irish Republican Army allies were responsible for two recent killings. Police said the bomb, planted in a car parked 200m from a police station, caused extensive damage to banks and other businesses in this town 30 miles south-west of Belfast. There were no casualties.

* Cadbury, Carlyle team up: British food and drinks group Cadbury Schweppes said yesterday it had teamed up with US investment company Carlyle Group to acquire two bottlers for $724 million. Cadbury will be a minority equity partner with Carlyle, based in Washington DC, to buy Midwest Beverage America and Select Beverages in the Midwest. Cadbury will own 40% of the new group to be called American Bottling, but will have full management control. Carlyle will own the remaining stake.

* Asia stocks closed mixed: Asian stock markets finished mixed yesterday, brushing aside news of a UN deal on Iraqi arms inspections while keeping an eye on fresh weakness in Asian currencies. Most of the region's currencies ended softer with the yen particularly hard hit after Japan was heavily criticised at a weekend meeting of the Group of Seven (G7) leading industrialised countries.

* Disney may sell stake: Walt Disney Company said it is exploring the sale of its minority stake in Scandinavian Broadcasting System.

Source: Flight Daily News