Late dash not enough for Footsie

A firm opening by Wall Street was the ultimate determining factor behind the London market's closing performance yesterday

A firm opening by Wall Street was the ultimate determining factor behind the London market's closing performance yesterday. The FTSE 100, London's main stock market benchmark, made a late upside dash during the last five minutes of trading, having spent the day uncertain on which way to jump.

"The US interest rate story is still the big game in town; there is every chance of the Fed nudging rates higher after the May 19th FOMC meeting; if that is the case then markets will come under pressure; if not, then the possibility of a rise at a later date will still overhang the market; I think it all points to further weakness," was the view of one marketmaker.

At the finish of a rather ragged trading session the FTSE was 26.5 ahead at 5,833.1. The closing gain masked an overall picture of extreme uncertainty, however, ahead of some crucial economic news from the US later today.

The two important economic news items due from the US concern first-quarter gross domestic product and the employment cost index for the same period. The latter is viewed by many economists as one of the crucial numbers likely to be scrutinised by the FOMC and which, along with this month's non-farm payroll report, due to be unveiled on May 8th, will determine whether the Fed sanctions a rise in US rates.

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Dealers also mentioned next week's meeting of the Bank of England's monetary policy committee as a possible trigger for further weakness in the market, although a rise in UK rates is seen as very unlikely.

The Footsie moved in a near-65 point arc during the session, dipping away at the outset of trading, in the wake of a disappointing outcome to Wall Street's overnight trading session, which saw the Dow Jones Industrial Average give up a near 90-point gain during London trading hours, to finish the day a net 18 points lower.

Sentiment in London, already dented by that performance, was eroded further by a weak showing by many of the Asian markets, most notably Hong Kong, which fell 2 per cent. Tokyo was down 1.6 per cent.

The Footsie kicked off on the downside, the index sliding 26 points in quick time as the institutions held back from the market, leaving the field clear for profit-takers to move in after Tuesday's surprisingly strong rally.

After struggling for the first couple of hours, the leaders then embarked on a useful rally, helped along by a resolute showing by the market's second liners and smallcaps.

Marketmakers reported consistent support for the 250 and SmallCap constituents, with the former hitting a session high of 5,573.3 before finishing the day up 1.0 on balance at 5,568.9. The SmallCap index was even more impressive, closing up 5.3 at 2,633.8, only a fraction below the session high.

But sentiment turned quickly in the leaders, around lunchtime, the Footise reversing again and hitting a session-low of 5,774.4, down 32.2, ahead of Wall Street's opening.

Turnover remained disappointing, dealers said, reaching 810 million at 6 p.m.