London Report: The recent powerful upsurge in London's equity market, which was fuelled by strong gains on Wall Street and hopes of an imminent reduction in US interest rates, gave way to more sober assessment yesterday.
The start of a week full of crucial economic news and data, but a generally light programme of company news, brought with it persistent flurries of profit-taking.
The FTSE 100 index lost 100.8, to finish at 4,221.6, only a shade above the day's low. Of the other main indices, the FTSE 250 fell 21.4 to 4,701.5, having been down to 4,693.8, while the Techmark 100 dropped 12.8 to 752.5. The FTSE SmallCap managed a minor gain, adding 1.6 at 2,002.5.
But while the broad market lost ground, turnover was described as "dismal" by traders, and fell away to the lowest levels for some months as the holiday season reached a peak and fund managers awaited the US interest rate news this evening.
Dealers said the stock market was now suffering from the extremes of high volatility brought on by low liquidity and said such extremes would persist until the end of the holiday period.
The downside pressures affecting London stocks stemmed mostly from the US, where the recent improvement in sentiment on Wall Street as the Dow Jones Industrial Average rallied 5.2 per cent last week was halted yesterday.
The Dow kicked off yesterday's session under substantial downside pressure, disturbed by concerns that the Fed's open market committee might leave rates on hold and that the August 14th deadline for US company chiefs to confess any overstated earnings might produce a late flood of bad news.
The Dow dropped more than 160 points in 15 minutes of the opening yesterday, before stabilising and dipping off again.
The FTSE 100 was also pressed on the downside, falling away at the outset, rallying modestly in mid-morning and subsequently sliding again as US futures pointed to a dull start on Wall Street.
The day's domestic economic news, on producer prices, caused no problems to the market.
Turnover in equities reached 1.4 billion shares by the 6 p.m. cut-off point. - (Financial Times Service)
