THE British stock market yesterday lived up to the maxim that "it is better to travel than to arrive" as it came to the end of a turbulent week. The FT-SE 100 index started the day up 6.1 on its previous close, with some hoping it could recover from the anxiety prompted by Wednesday's rise in British base rates.
The first signs that a bumpy ride was in store arrived nearly an hour after the opening in the form of a stronger-than-expected British purchasing managers index. The figure for October rose for the fifth consecutive month reaching 54.5 per cent, well ahead of analysts' expectations.
The data served to increase investors' inflation worries and prompted a reversal in Footsie's early advance. Mr Richard Jeffrey, group economist at Charterhouse, observed: "There is still a lot of anxiety among fund managers about Wednesday's rate rise."
But if worries about British inflation had once again become the dominant factor in the market, there was still a feeling that the afternoon's US economic data would provide a warm welcome at journey's end. The publication of the US non-farm payrolls report met with expectations and briefly reduced Footsie's decline.
Such hopes proved short-lived as a jump in US factory orders hit the Treasury bond market and US equities, although both steadied in later trading. The fall in the US acted as a signal for a sell-off in London, and Footsie, having made a brave attempt to limit its losses, fell back sharply.
