Interest rate worries continued to dog the London market and international factors failed to come to its rescue. The FTSE 250 index, heavily-weighted towards industrial stocks, extended its losing streak to eight days.

A series of stronger-than-expected economic data over the week - retail prices, average earnings and retail sales - seems to have persuaded investors that a further increase in interest rates would be imposed during the next few months.

Sterling has received another lease of life since early June's increase in rates and touched the DM3 level briefly yesterday, although it closed around a pfennig down at DM2.9867.

Rate fears and the continued strength of the pound dogged FTSE 250 stocks again, with housebuilders taking a particular battering. The index lost another 60.7 to 5,598.5 to take its cumulative loss for the last eight trading days to 367.4 points, or 6.2 per cent.

For the blue-chip FTSE 100 index, the main event of the day was expected to be the expiry of June options and futures contracts between 10.10 a.m. and 10.30 a.m. Footsie managed a rally to its high for the day, up 19.2 at 5,831.3, just before the expiry but in the end, it passed without incident.

But for the rest of the day, the leading index was struggling to make progress. Asian markets slipped back after their yen-inspired rally and Wall Street eventually drifted lower. The Dow Jones Industrial Average was around 30 points down by the London close.

International bond markets in general were nervous that further intervention to support the yen next week would involve US Treasury bond sales. Footsie ended at its worst level of the day, down 64 at 5,748.1, for a 21 point loss on the week. The FTSE SmallCap index dropped 14.3 to 2,694.8, and the All-Share index fell 29.2 to 2,726.87.