A NORTH Oxfordshire software firm has moved quickly to quell rumours that caused a sudden and unexplained Stock Market panic, wiping out almost half its value in a matter of minutes.

Market traders blamed vague gossip of financial difficulties at iSOFT Group, Banbury, which began to circulate on Tuesday afternoon, for the downturn.

But the company, which employs 300 people, dismissed rumours it was poised to issue another profit warning after further problems with a multi-billion pound project to overhaul Britain's NHS computer systems.

Shares in iSOFT plummeted by more than 40 per cent last week before easing back to about 17 per cent below their previous value.

In January, it warned of a £55m shortfall in full-year revenues due to delays to the £6.2bn modernisation of the NHS computer systems.

The company said in a statement: "iSOFT is aware of market speculation regarding the financial standing of the company. The company believes this speculation is unfounded and reiterates the guidance for the current financial year in its trading update of January 30, 2006."

The shares slumped last week after consultancy Accenture, iSOFT's partner on the National Programme for IT in the NHS, said it expected to make a £450m loss on its health service contracts over the next three to four years.

Accenture blamed increased deployment costs and delays by a contractor on the project for the expected loss.

It's announcement fuelled analyst concerns that iSOFT may get less money than expected from its NHS contract, which accounts for about one fifth of its revenues.

iSOFT spokesman Brian Hemming said: "Some sort of rumours spread, but there was no substance to them."