THE London equity market's pre-and post-budget confidence was attacked on a number of fronts yesterday.
Sterling continued its upward move on the prospects of a rate rise tomorrow, following the Monetary Policy Committee meeting.
Adding to the general discomfort in the market was a sharp sell-off in Woolwich shares, which threatened to dip below the 300p mark, having traded in excess of 370p on Monday, the stock's debut day.
"A 20 per cent slide in a demutualisation stock on its second trading day has done nothing for the small investors' confidence," said a salesman at one big broker.
The FTSE 100 index, which had ended Budget week sitting proudly above the 4800 level, suffered its third successive decline with selling pressure building up through the session.
It closed a hefty 52.2 lower at 4758.5, having bottomed out at 4751.9 just before the US markets opened.
The index has now fallen 73.2, or 1.5 per cent, during the last three sessions.
The market's pain was not confined to the leaders either, with the second-liners and small caps given a severe buffeting. The FTSE Mid-250 just hung on to the 4400 mark, finishing the day a net 26.1 off at 4400.8, while the FTSE SmallCap index dipped 7.1 to 2217.3.
Inflation figures for June well in excess of consensus forecasts were said by dealers to have been the main reason for the market's dismal showing.
A headline increase of 0.4 per cent in inflation last month, and a 0.3 per cent increase in the core figure, turned up the pressure for a British interest rate rise tomorrow, when the monetary policy committee (MPC) meeting finishes.
One of the few saving graces for the market was Wall Street's positive opening yesterday, alter a worrying end to its previous session.
On Monday, the Dow Jones Industrial Average looked well set to launch an attack on the 8,900 level, getting to within 18 points of that figure before sliding back to finish 37 points lower. Yesterday the Dow stood over 50 points higher as London closed.
One of the day's features was another spate of currency-inspired profits downgrades across the market's leaders. Prominent among these were RMC, Pearson, Reed, Reuters, BT, SmithKIine and Zeneca.
More worrying for fund managers was a fresh wave of profit warnings from Dalgety, Molins and Renishaw.
