Another encouraging set of domestic inflation figures provided only a temporary prop for London's stock market. However, all eyes were focused on the substantial, but widely expected, job cuts announced by Merrill Lynch.
It was only later in the session that the main talking point switched from Merrill's job cuts to the placing of Granada's 6.5 per cent stake in BSkyB.
Instead of celebrating news that core inflation had hit the government's 2.5 per cent target for the second consecutive month, the market succumbed to intermittent profit-taking, following Monday's record gain on the FTSE 100.
The FTSE 250, meanwhile, proved exceptionally resilient, easily recapturing an early five-point loss and closing the day a net 21.0 higher at 4,389.7.
Sentiment, especially in the FTSE 100 constituents, was vulnerable from the outset of trading. Wall Street failed to hold on to its best gains on Monday night, although the Dow Jones Industrial Average still posted a three-figure gain and managed to finish above 8,000.
Tokyo was hit by a mild sell-off and down 2 per cent. The big European markets came in with a lower bias and London's Footsie 100 was down 81 points at its worst.
The ensuing rally came in the wake of the inflation news, which reignited hopes that domestic rates might well be cut again after the next meeting of the Bank of England's monetary policy committee, scheduled for November 4th and 5th, with the decision due on the second day.
Turnover in equities was 1.04 billion shares, boosted by the exceptional activity in BSkyB.
