Another tense day in London's equity market saw the FTSE 100 index stage a good recovery after a nervous start, only to succumb to a Wall Street-inspired slide late in the day and register its ninth decline in 10 sessions.
Dealers expressed mild disappointment with yesterday's overall performance. Turnover, always reduced on Mondays as the institutions review their strategies, was described as poor, especially in view of a burst of corporate activity, involving a host of big market names.
At the 6 p.m. count volume was 1.6 billion, although that figure was boosted by 160 million shares traded in Vodafone group and 123 million shares in Belgo Group, one of the market's "penny stocks". There was also evidence of another programme trade.
In the background, there remained persistent unease about the damage wrought by last week's petrol blockade. And the latest advance by crude oil prices, while giving an index-lifting boost to the two oil majors, BP Amoco and Shell, was seen as a reminder of the inflationary potential of rising oil prices.
Premium crude oil prices raced towards $37 a barrel in the US, and Brent for November delivery approached $35, causing unease among economists on both sides of the Atlantic who have constantly warned about the effect of higher oil prices on inflation, economic activity and corporate profits. The latest surge came as Iraq made increasingly hostile comments about Kuwait.
Adding to the general air of uncertainty in London was another wobbly day for sterling which dropped below $1.40 against the dollar although it later rallied a shade and also fell against the euro.
London made an extremely cautious start to the day, the FTSE 100 index sliding 45 points within minutes of the opening, reflecting the steep decline on Wall Street on Friday evening when the Dow Jones Industrial Average plummeted 160 points and the Nasdaq Composite 78. A mid-morning rally brought the index back into positive territory over lunchtime when the market looked set to finish the day in good heart.
The FTSE 100 finished the session 7.1 off at 6,410.2, having swung in a 92.9-point arc, while the FTSE 250 index was finally 53.4 lower at 6,901.8, having dipped back below 6,900 at its worst of the day. The FTSE SmallCap lost a further 26.1 at 3,539.5 and the Techmark 100 of leading technology stocks fell 54.89 to 3,827.88.
Of the day's big stories, the agreed Smiths Industries bid for TI Group was given a determined thumbs down by the market, with Smiths shares plummeting almost 12 per cent on the news.
