ANOTHER worryingly nervous performance by global bond markets in the wake of the rift between the German government and the Bundesbank and ahead of Sunday's French general election brought renewed uncertainty to London's equity market.
But a strong showing by recently weak engineering/defence/aerospace stocks came to the market's rescue, helping to minimise the impact on the FTSE-100 index of a wholesale retreat by the financial sectors.
The latter have been the main driving force behind the stock market's meteoric rise this year which has seen Footsie up almost 14 per cent; since the general election, the index has risen 5.3 per cent.
Footsie ended the day 5.2 off at 4,672.3 after swinging in a 32 point are during a tense trading session. The FTSE Mid 250 was virtually becalmed all day, eventually finishing 0.2 up at 4,508.2, while the FTSE SmallCap settled 0.9 off at 2,298.9. The FTSE All Share index closed 1.88 down at 2,220.52.
Market makers, while noting the growing uncertainty in bonds and the worries about the out performance of financials because of the "Halifax factor", were not unduly concerned about a big sell off in the market.
"Underneath, the market feels fine. There are no real sellers hitting the market at the moment and we seem to have ridden out the storm caused by the German and French worries," said the head of market making at one of the big UK securities houses.
He sounded a note of caution, however, about a possible interest rate rise in Japan, which he said might produce some repatriation of Japanese investment funds.
