The telecoms sector which, led by Vodafone, plays a substantial part in determining the direction of the FTSE 100 index, suffered a sharp setback in the afternoon.

Firstly, WorldCom, the US group, caused widespread disappointment by issuing a poorly-received third-quarter earnings statement. And piling on the pressure for the sector were a variety of rumours about earnings and recommendation downgrades affecting Vodafone Group, none of which was confirmed.

But the damage was done and Vodafone Group finished the session a net 10p lower at 276p, third worst in the 100 index. Energis was the worst of the top 100 stocks, down 40p at £5.49p, while Cable & Wireless was down 45p at £9.30p.

The oil majors benefited from the rush out of the telecom sector. They were also supported by fresh evidence of tight supply in the US as the latest data was released by the American Petroleum Institute. BP ended the day 12p higher at £5.97p while Shell Transport closed 7p up at £5.62p. Scottish Power lifted 5p to £5.23p as Dresdner Kleinwort Benson recommended it as a "buy" to £6.50p.

Mining and metals group Billiton, which was the Footsie's best performer on Tuesday, added another 2p at £2.65p after releasing some positive news at the group's annual meeting.

CGNU was bought as the market reacted positively to news that the insurer was getting out of the London underwriting market. CGNU has agreed to sell its Lloyd's insurance market managing agency, Marlborough Underwriting Agency, to Warren Buffet's Berkshire Hathaway Group. Financial terms were not disclosed but CGNU said the disposal would prompt a £448 million charge against its nine-month results.

There was a much better feel to the general retailing sector, despite the rather worrying CBI Survey of Distributive Trades which pointed to a standstill in retail sales last month.

There was no doubting the star performer in the consumer arena as Matalan, one of the new breed of retailers, brought the smiles back to the faces of many retail analysts by posting much-better-than-expected interim results. Profits were up 72 per cent and the interim dividend increased by 75 per cent, well in excess of consensus estimates.

Boots was another strong performer in the sector, its shares moving up 11p to £5.61p ahead of this morning's interims, which are forecast to produce a 34 per cent increase in pre-tax profits, and an 8 per cent increase in the dividend, according to Dresdner Kleinwort Benson. Debenhams was close behind Matalan in the FTSE 250 index, its shares advancing 13p to £2.27p on good turnover of more than three million shares.