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RSA shares are hit by Irish division turmoil

The resignation of RSA Insurance chief executive Simon Lee and a warning that its dividend was under threat sparked a heavy fall in the group's shares.

The blue-chip stock tumbled by as much as 18% in a session when the City's top-flight held firm after recent turbulence caused by speculation that the US Federal Reserve will cut monetary stimulus as early as next week.

The FTSE 100 Index had slumped to a five-month low on Thursday but steadied in the latest session, finishing just 5.3 points off at 6440.

European markets also edged into the red while on Wall Street the Dow Jones Industrial Average nudged ahead a little.

On currency markets, the pound was flat at 1.63 US dollars and 1.19 euros.

The troubles of More Than insurer RSA provided the main interest for investors after it revealed more problems at its Irish division.

Mr Lee, who has been at the helm for two years, stood down as it emerged that its Irish business will need to strengthen reserves by £130 million, on top of the £70m black hole identified last month. Shares later closed 7% or 7.2p lower at 92.5p as the company warned of a further reduction in earnings for this year and the likely impact on next year's dividend payout for shareholders.

At current levels, analysts said RSA's share price made the company vulnerable to approaches from rival firms for its prized assets, including its operations in Scandinavia and Canada.

British Gas owner Centrica was down 1.9p at 323.2p after it was named preferred bidder as part of a consortium to buy Ireland's biggest gas supplier in a deal set to cost £1 billion.

The group is set to pick up a business with more than 700,000 household and business customers, as well as a gas-fired power station in Cork. British Gas already supplies 12 million homes in Britain.

Pharmaceuticals company AstraZeneca was among the leading risers in the FTSE 100 Index as it revealed two pieces of good news from its drugs pipeline.

Shares were 60.5p higher at 3518.5p after the US Food and Drug Administration backed Dapagliflozin, which is a new oral anti-diabetic product.

The company also reported progress in trials of a new gout treatment that can be used by patients who are unable to take other drugs.

Chip designer ARM Holdings was also a big climber after it snapped up Geomerics, a leading developer of gaming lighting technology, for an undisclosed sum.

Shares in ARM, whose designs are found in a range of Apple products, have risen by a third so far this year. They were up another 29p to 1001p yesterday.

Meanwhile, Sports Direct International recovered some of the losses suffered on Thursday when half-year results came in short of some analysts' elevated expectations.

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