Renewed downside pressure on the recently high-flying TMT (technology, media and telecoms) stocks produced another round of losses across the leading FTSE indices yesterday.
The latest setback in TMTs came as Wall Street's Nasdaq Composite finished Tuesday's session with a 91-point decline and continued to lose ground as trading began yesterday.
While the Nasdaq continued to flounder, the Dow Jones Industrial Average surged ahead, driven higher by a steep rise in JP Morgan shares, amid rumours that Deutsche Bank might be about to bid for the US group.
As was the case on Tuesday, selling of TMT stocks was fairly light. Dealers claimed the market's weakness was more a reflection of the big institutions standing back from the market, rather than selling into it.
Traders said it was understandable that institutions were reluctant to throw more cash into the market ahead of the outcome of the latest meeting of the Bank of England's Monetary Policy Committee.
Few expect the MPC to lift rates, especially in view of the most recent economic evidence, notably yesterday's survey of distributive trades published by the Confederation of British Industry, which pointed to retailers cutting prices and sales slowing over the month.
And the industrial production and manufacturing output data announced yesterday came in lower than expected, encouraging the view that the domestic economy is slowing and that no further rate rise is needed.
At the finish of a reasonably active trading session, the FTSE 100 was just off its worst of the day, down a net 57.8 at 6,694.7, having dropped to 6,688.4.
Other FTSE indices also suffered. The worst performance came again from the Techmark 100 - last week's star turn but now very much beleaguered by profit-takers prompted partly by the downgrade of Intel of the US.
The Techmark 100 index dropped 82.14 to 4,020.83, for a two-day decline of 266.17, or 6.2 per cent.
The FTSE 250 dipped 31.2 to 7,015.9, but the SmallCap proved resilient, eventually closing only 0.7 off at 3,615.6.
The market's largest stocks continued to play a big part in determining trends in the 100 index. Vodafone Group, by far the heaviest weighted stock in the index, continued to see-saw, eventually ending the day a net 10 lower at 282p, after further heavy turnover.
Other TMTs driving the indices lower included BT, whose shares were unsettled after Moody's, the debt-rating agency, downgraded its rating on the group, adding to concerns about the sustainability of the dividend. News of a big placing of Bookham Technology stock dogged its shares.
