Another big sell-off in the financials, pharmaceuticals and oil sectors drove the FTSE 100 index, the London equity market's main benchmark, sharply lower again yesterday, sending ripples of unease across the rest of the market in the process.

The banks, insurances, drugs and oil sectors have been in the forefront of the British market's move to record levels over the past couple of years. Dealers reported large-scale selling across those areas, as well as switching into sectors that have underperformed the Footsie in recent months and years, notably the big manufacturers and exporters which have been hampered by the strength of sterling.

The latter was unchanged at the close, as measured by the Bank of England's sterling exchange rate index, but was substantially lower over the week after the shift in the market's perception of the next move in domestic interest rates.

A raft of economic news earlier in the week, including average earnings, and retail sales, were seen as indicating a slowing of the British economy and reducing the need for a further increase in rates. More importantly, Mr Charles Goodhart, a member of the Bank of England's monetary policy committee, who previously favoured a rate increase, is known to have changed his mind, now advocating rates are left on hold.

Yesterday brought news that British gross domestic product during the first quarter came in plus 0.4 per cent, fractionally lower than the consensus estimate of plus 0.5 per cent.

Such was the momentum behind the latest setback in the leaders that the FTSE 100 briefly dipped below the 5,800 level, posting a 112.4 decline in the process, before stabilising as Wall Street came in, and finishing the session a net 34.2 off at 5,863.9.

The bouts of extreme weakness in the leaders did not follow through fully into the market's second-line stocks which have been substantial beneficiaries of sterling's recent decline.