The institutions continued to back away from London's stock market yesterday, with the benchmark index, the FTSE 100, posting its third consecutive decline and other leading FTSE indices also coming under renewed pressure.
In sharp contrast to the trend over the previous two sessions, however, the Techmark 100 index staged a strong rally late in the session, boosted by the recovery in the Nasdaq Composite in New York. It was finally 4.37 up on the day, having retreated to 3,937.84 during the morning.
The latest weakness in London stocks came in spite of the decision of the Bank of England's monetary policy committee to leave rates on hold for the seventh consecutive month. Although few expected the committee to move on rates the market had been suffering from bouts of nerves over the previous couple of days.
The FTSE 100 index finished only 5.5 off at 6,689.2, having traded in a 40-point arc, which saw the index up 14.4 at best and down 26.2 at its worst.
That slim decline in the FTSE 100 was not seen as a true reflection of sentiment. The index was propped up all day by further gains in three of the market's largest stocks: Vodafone Group, BP Amoco and Shell. Vodafone's latest uptick came in the wake of news that the mobile phones' group had signed its 10 millionth customer.
The oil giants, meanwhile finished up on the day, but well below their best - both stocks briefly hit record levels - as oil prices hovered around $34 a barrel ahead of the weekend's OPEC meeting.
While many of the winners in the 100 index came from the recently poor performing old-economy areas, by far and away the worst individual performance came from Invensys, the controls group, whose shares plummeted around 35 per cent, after a profits warning.
The UK strategy team at Deutsche Bank issued some words of warning in its monthly market analysis. "We hate to be party poopers but we believe the market is more likely to consolidate at the top of the trading range rather than sprint on into new high territory. Inflationary risks persist. The oil price is uncomfortably high and pay settlements are edging higher, which also threatens profit margins. Moreover, there is a strong hawkish camp within the Bank of England's monetary policy committee."
The FTSE 250 registered is third consecutive decline too, slipping back a further 15.95 at 6,999.95, having fallen to 6,970. The SmallCap was unchanged on balance after moving in a narrow range.
Turnover in equities reached 1.65 billion shares, with Invensys accounting for over 17 per cent of the total and Vodafone for 117 million shares or 7 per cent.
