BRITISH stocks put up a spirited performance for much of yesterday, fighting hard to resist the damaging impact of a series of much stronger than expected economic data which increased the chances of a rise in interest rates after the May 1st election.
And it was not just domestic news that jolted the market's confidence. Wall Street lost the 6,900 level on the Dow Jones Industrial Average on Tuesday evening, sliding almost 60 points. The US opened in reasonably good heart yesterday, however, gaining around 20 points in early trading after the inflation report for February, but later fell sharply as dealers had second thoughts about the data.
Some 90 minutes after London finished, the Dow was down 55 points and "heading south" as one dealer put it.
But London eventually succumbed to selling pressure induced by the weakness of gilts and also to increasing fears that the US is facing a rise in interest rates after next Tuesday's meeting of the Federal Reserve's open market committee.
The FTSE 100 index finished a day of increasing volatility 24.6 lower at 4,332.2. The FTSE Mid250, bolstered by a series of excellent company news stories, closed only 8.6 down at 4,652.9, while the FTSE SmallCap lost 9.3 to 2343.1.
The deputy head of market making at one top London securities house said the market "felt horrible. We're worried about inflation, we're worried about global bonds, we're worried about interest rate rises".
He said London was "heading south, it's just a question of how far we go".
That view was echoed by other senior dealers with one noting there was no real reason for fund managers to rush into British equities.
