Telecoms and banks led blue-chip shares to a lower close yesterday as investors took fresh signs of weakness in the US economy as a signal to bank further profits from the week's TMT-fuelled run higher.
The FTSE 100 index closed 21.5 points down at 5,766.6, lurching to an afternoon low of 5,735.2 after a key US consumer sentiment index came in lower than expected, but then rallying on position squaring ahead of the long Easter weekend.
Telecoms saw market heavyweight Vodafone dip 1.4 per cent and Cable & Wireless slip 2.8 per cent, while among the banks Barclays lost 0.5 per cent. Together the banks and telecoms took more than 12 points off the FTSE 100.
Irish Internet security specialist Baltimore Technologies dropped 20 per cent after it warned of first-quarter revenue shortfalls for the second time in three weeks.
FTSE 100 techs generally had a weak session with Dimension Data closing 6 per cent down and Logica off 4 per cent.
"The Street is shut tomorrow, it's open on Monday and no one really knows what to do. Wall Street has the capacity to end at rather different levels from where it is by the time we close. People are trying to stay flat and keep out of trouble," said a senior trader, explaining the late afternoon bounce.
Prices had drifted from the outset as investors melted away from the market ahead of the four-day Easter break in Britain, with profit takers nudging the FTSE 100 further back from the week's highs above 5,800.
The index has still finished 165 points up on the week.
"We've had a pretty good rally in some of the stocks which in the short term got oversold, like the TMTs," said Mr Wade Pollard, senior fund manager at HSBC Asset Management.
"Probably a lot of the hedge funds which have gone short have decided to close their positions wondering how much the Nasdaq might bounce further," he added.
