LONDON -- A softer-than-expected U.K. inflation report helped temporarily lift the London market off its lows, but by midday the FTSE 100 was still down 33.40 points to 6548.60.


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, the index's biggest stock, was a major drag as it fell a further 5.25p to 266 ($3.72). This followed a 4.5% fall on Monday as

Hutchison Whampoa

further reduced its stake in the world's largest mobile-phone company. Fellow telecom heavyweight

British Telecom


was also lower, down 10p to 806.

Oil stocks were taking a breather and couldn't counteract the telecom sector's weakness.



added just a penny to 672.


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was up 2p to 629, shrugging off news that it has lost 130,000 barrels per day of production in Nigeria because of an oil spill.

Instead, pharmaceutical shares picked up the slack.


was up 154p to

33.39 after

Goldman Sachs

raised its price target on the stock to

36.00 from


Glaxo Wellcome



Smithkline Beecham

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bounced back following their weakness Monday on news that their

merger will be delayed. Glaxo was up 61p to

19.71, while SmithKline gained 25p to 888.5.

Biotechnology companies were in the spotlight this morning following hotly anticipated first-half results from


. Despite making its first profit -- a rare feat in the U.K. biotech industry -- the shares fell 90p to

14.07. Investors had ploughed into the stock recently following news that the company had finally sold its Medeva vaccines business to Powderject to better concentrate on its core business.

Tech stocks took a bit of a pounding on the back of the


losses overnight. The

Techmark 100

fell 81 points to 3909 in sympathy.

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Investors showed no mercy to


, which dropped a huge 10% to 607.5p. The company ended last week at 805p, but has lost massively on the back of poor earnings results reported Monday. And

Geo Interactive

continued to fall on the back of Monday's announcement of a management shake up, shedding a further 17.5p to


Europe's other major stock markets were lower, as the

CAC 40

in Paris was off 25.62 points to 6649.39 and the

Xetra Dax

in Frankfurt was down 61.57 points to 7152.88. The

Neuer Markt's


Nemax 50

index was 64 lower to 6102.

Continental tech stocks were again hurt by the Nasdaq's poor performance, with



down 1.20 euros to 66.95 ($57.52),


off 1.02 euros to 179.55 and software maker


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4.97 euros lower to 284.00.

Telcos were having a mixed morning, with

Deutsche Telekom

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down 0.06 euro to 42.75,


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up 0.37 euro to 23.70 and

France Telecom


up 0.30 euro to 132.80.

Elsewhere in Paris,


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fell 1.61 euros to 48.89 and telecoms equipment maker



dropped 2.00 euros to 87.00.