IF London is Wall Street's poodle it has obviously slipped its leash. While the Dow Jones Industrial Average lifted nearly 200 points over the British trading week, London put on a dismal performance which saw the Footsie fall by 1.7 per cent.

This gap has caused havoc among international arbitrageurs, the dealers who trade on the spread between the two indices.

"We used to unwind our positions when the spread widened to 700 points. This week it widened to 1,850 points and everyone got wiped out," said one frustrated specialist.

Yesterday saw a continuation of the same bizarre trend. British stocks were marked higher at the start following Thursday's record breaking rise on the Dow. However, there was little underlying enthusiasm and news of a rise in sales on the high street was viewed as undermining the chances of another interest rate cut rather than as an encouraging economic signal.

Then Nurdin & Peacock, the cash and carry group, warned that its 1995 profits would probably be lower than analysts had forecast. The statement was taken as a pointer to results from other British companies ahead of the forthcoming reporting season.

In the event, however, the upward pressure from Wall Street proved too great. The Dow moved forward another 30 points in the first two hours of trading and a strong performance by Treasury bonds helped the British 10 year gilt recover from earlier lows to end the day marginally higher.