Another disappointing performance by Wall Street ensured that the FTSE 100 index suffered its second successive losing session yesterday. The blue chip benchmark opened lower in the face of Tuesday's 160-point fall in the Dow Jones Industrial Average, hitting a low for the day of 5,384.3, down 50.4 after just over an hour of trading.

At lunchtime, Footsie mounted a rally on the back of the latest US economic data. Second-quarter GDP is now estimated to have grown by an annualised 0.2 per cent. While that was the slowest growth since 1993, the figure was better than expected.

The FTSE 100 reached its high for the day of 5,460.2, up 25.5, but it closed off 12.90 at 5,421.80, a modest loss in the circumstances. Some speculative activity in the banks helped stabilise the index. The FTSE 250 fell 15.7 to 6,158.4 and the SmallCap edged down 3.3 to 2,725.2. The Techmark 100 index of leading technology stocks managed to buck the trend, rising 5.98 to 1,499.40, thanks to a rebound in CMG, the software group. Its shares, which had been marked down heavily ahead of its results, rebounded 22 per cent when the numbers were better than feared. CMG's performance was in sharp contrast to Psion, whose shares fell 11 per cent on the lack of a clear outlook with its results.

There was the usual round of profit warnings in the smallcap sector with Intelek and Advanced Power Components blaming a slowdown in the telecoms sector and PNC Telecom, the retailer, hit by reduced consumer demand for mobile phones.

Steve Russell, UK strategist at HSBC, said: "We still think there is scope for a decent rally in September and the fourth quarter. The market is showing manful resistance in the face of a depressing picture in the US."

But Mr Russell added: "Even if we get a decent year-end rally, returns in 2002 will look pretty anaemic as investors become disappointed about the strength of the recovery."

After the boost given to volume by the Woolworths demerger on Tuesday, volume settled back at holiday levels, with 1.65 billion shares traded by 6 p.m. Attention in today's session will switch to Europe, where investors are hoping the ECB will cut interest rates by a quarter of a percentage point.