A powerful performance from BP Amoco and a strong and sustained rally by the banks and insurance sectors failed to prevent London's leading index, the FTSE 100, from losing ground for a fourth consecutive session yesterday.
Although the blue chip index recouped an early 61-point decline and posted a 26-point gain at its best, it eventually succumbed to a late burst of selling pressure triggered by Wall Street's failure to maintain its early promise.
Footsie closed a net 2.4 off at 6,346.3, extending the fall over the week to 311.9, or 4.7 per cent.
The FTSE 250, meanwhile, took another fearful pounding, plunging 95.4 to 6,352.5, having posted a three-figure fall at its worst. Over the week, the 250 dropped 192.1,or 2.9 per cent. A 14.0 decline in the FTSE SmallCap, to 3,235.4, still left that index up over the week, however.
At one point, not long into the trading session, the FTSE 100 index fell below the 6,300 level for the first time since November 5th. It was dragged down by a sharp reversal in fortunes for many of the high tech and telecoms stocks that have played such a large part in the stock market's gains over recent months.
The expiry of FTSE index options in mid-morning also added to the market's volatility. One reason for the early weakness was the continuing strength of sterling and further unease over the prospect of interest rate rises in the UK and the US in the short term.
Those worries intensified in New York overnight when comments by US Federal Reserve governor Laurence Meyer highlighted concerns about an overheating US economy. The remarks were interpreted by some as a hint that US rates will rise after the February 1st-2nd meeting of the Fed's rate-setting open market committee.
The Dow Jones Industrial Average fell sharply overnight, posting a 138-point slide, although the Nasdaq Composite, heavily weighted in high tech stocks, moved in the opposite direction, finishing at a record high.
The day's domestic economic news, M4 money supply and lending data and the public finances for December, did not have an impact on the UK interest rate worries. While the public sector net cash requirement, at £9.2 billion sterling, well exceeded expectations, the M4 data were broadly in line with expectations.
