SHARES in London suffered their second decline in a row, but the market's resilience was demonstrated when the FTSE-l00 index recovered much of its losses in the afternoon session.
Trading activity was dominated by the placing of part of the Kuwait Investment Office's stake in British Petroleum, which Goldman Sachs carried out in New York and London. Volume pushed over the one billion share mark, at 1.09 billion, by the 6 p.m. count.
There were signs that the market wanted to take a breather after the 11-day rally which took Footsie to repeated all-time highs. Some investors may well want to see how the first Labour budget hits the corporate sector.
Wall Street's disappointing finish on Wednesday, and the effect of the BP placing, set the market off to a bad start, with Footsie opening 22.2 lower at 4,664.7.
The main domestic news was the British retail prices numbers, with underlying inflation hitting the government's target of 2.5 per cent a year for the first time since December 1994.
The inflation data failed to lift the market's spirits and Footsie, along with gilts, stayed in negative territory for much of the morning. The effect of the GrandMet/ Guinness merger, which raised takeover hopes across the market at the start of the week, seemed to be fading.
A mixed set of US economic statistics initially sent Footsie to its low for the day of 4,654.4, but Wall Street quickly rallied from an opening loss. The Dow Jones Industrial Average was five points ahead when London closed. That allowed shares in London to recover steadily and Footsie closed 5.7 lower at 4,681.2, while the FTSE Mid-250 index dropped 7.4 to 4,521.9 and the SmallCap 2.0 to 2,314.8.
Shares have risen much more quickly than most analysts were expecting at the start of the year.
