Transportation Minister Chris Grayling offers Stagecoach a dressing down, shares fall 6%.

Shares in Stagecoach were blown the rails today after the rail business was placed on the naughty action by the Government.

Westminster stated yesterday that Stagecoach's contract to run the London-Edinburgh East Coast Mainline would end early after the firm "got its numbers incorrect", adding that it might step in to run the service which runs between London and Edinburgh.Should the franchise return to federal government hands it will be the 2nd time in a decade the line has been renationalised, highlighting the troubles dealing with Britain's privatised train network. Transportation Minister Chris Grayling told parliament that Stagecoach, which owns 90% of the East Coast franchise together with Virgin, had breached a financial covenant and a new arrangement was needed urgently. Liberum analyst Gerald Khoo said:"A tougher position by the Transport Department results in greater possible downside danger from the East Coast franchise than we had previously assumed. We had actually hoped the absolute worst case circumstance would be prevented, but DfT now appears intent to increase the last pain caused upon Stagecoach."Problems on the East Coast rail franchise were first highlighted back in November, when the Department for

Transportation stated the franchise would end in 2020. That had sent Stagecoach shares rising 13%to 180.5 p but today they tumbled 11.9 p to 133.4 p.The fall contributed to exactly what was another grim session for worldwide markets as the FTSE 100 toppled 143.34 indicate 7189.64. Searching for bright areas amongst the gloom was proving challenging as investors headed for defensive gold stocks such as Randgold and Fresnillo. They were the only risers on the primary market up 16p at 6540p and 3.5 p at 1316.5 p respectively. And it was a comparable story on the FTSE 250 as gold miner Polymetal International climbed up 12.8 p to 802.6 p. There were some bright spots on the FTSE 250 away from

gold miners. Infrastructure company Softcat lifted its full-year assistance on the back of a "strong" first-half. The billion-pound firm exposed that trading in the six months to January 31 had been ahead

of management's expectations and shares were up 14.4 p at 535p. Babcock fell 12.8 p to 639.8 p after it revealed incomes will grow slower than anticipated. Short-sellers-- consisting of hedge fund Marshall Wace-- have actually been ramping up their bets versus Babcock in current weeks amid issues

of a financing black hole and shares in other government contractors collapsing. The Ministry of Defence is Babcock's biggest client and it is heavily depending on federal government arms spending, which is under intense pressure.On the small-caps, oil company Enquest was lower after Brent fell 0.7% to$67.12. Shares were down 2.2 p at 33.05 p.

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