THERE were further signs of increasing unease across London's equity market as shares fell again for the fifth consecutive session yesterday, although they closed well above the day's worst levels as global bond markets rallied strongly.
"It's Gordon Brown, we're going down," remarked one market wit, referring to the growing nervousness about the July 2nd budget, which has begun to whittle away at the market's confidence over the last few sessions. He pointed to the persistent concern about tax increases.
There were plenty of other worries. Thursday's first meeting of the government's newly-appointed monetary policy committee was being viewed with concern, with some traders taking the view that a 25 basis points increase in British interest rates might follow.
The outcome of the British monetary meeting should be known before news of the US non-farm payroll report for May is published. "Friday could well be a big day in the market, if the bank moves rates higher and we get a bad employment report," said one observer.
It was also noted that the budget coincides with the next meeting of the US Federal Reserve's Open Market Committee. The combination of a rise in US rates and a hard-hitting British Budget is viewed with alarm.
At the end of a day of increased activity, the FTSE 100 index lost 5.0 at 4,557.8, bringing the decline over the past five sessions to 123.8 points or 2.6 per cent.
Of increasing concern to investors was the fact that the selling pressure, which has been concentrated in the leaders recently, broadened yesterday to encompass the second line stocks in the FTSE Mid-250 and the small shares in the SmallCap index.
The latter dropped 10.4 to 2,281.0, while the former gave up 19.9 to 4,562.0.
But London finished well above earlier depressed levels, which were said to have been caused by another big sell-off in the financials, themselves weakened by a lack of expected follow-through buying interest in the Halifax, the newly-converted bank. Halifax shares were marked down to 714p before embarking on a strong rally.
Apart from the Halifax, there were plenty of talking points in the sector; Barclays were heavily driven down before spiralling up late in the session after the bank insisted its BZW investment banking division was not for sale.
Leading insurance stocks also raced higher after a difficult start. Market-makers shifted prices higher after City Index, the financial and sports betting firm, announced it had commenced "grey market" dealings in Norwich Union shares ahead of the June 16th float. City Index's closing quotation yesterday was 300p-310p.
