IT was more of the same for London's equity market yesterday with unease about US interest rates and the political uncertainty in Britain spreading to all sections of the market.

While the FTSE 100 leaders, bore the brunt of the downside pressure on Monday, when May 1st was set as the date for the election, it was the turn of the second liners and smaller capitalised stocks to suffer most yesterday.

The FTSE 100 index followed Monday's 51.0 slide with a further 16.5 fall to 4356.8. The FTSE 250 posted a sharper 30.5 decline to 4661.5 and the FTSE SmallCap dipped 12.8 to 2352.4.

Marketmakers said London had come under renewed fire more or less from the opening of trading. Wall Street's late rally overnight, when it recaptured all of an 80-point slide and eventually finished 20 points higher, encouraged traders to hoist their opening quotations, only to run into unacceptably heavy flurries of selling pressure.

So with the marketmakers cutting and running, share prices began to wilt, driving the various indices down with them.

At its worst, over lunchtime, Footsie was down 33.2 and looking exceedingly vulnerable, only to stabilise and thereafter rally. The FTSE 250 closed only 2.7 off the day's low while the SmallCap's closing level was the worst of the session.

There was evidence of a couple of small-sized programme trades, executed during the morning, but these were said to have had only a minor impact on the market's direction. At 6 p.m., turnover amounted to 836.7 million shares, split almost 50-50 between Footsie and other stocks.

Dealers said the market's most pressing concerns were about the potential for a rates rise after next Tuesday's meeting of the Federal Reserve's Open Market Committee. The odds slightly favour a 25-basis-points increase, although many insist that US equity and bond markets have mostly factored in such a move.

Regarding the election, some observers said London might have to contend with a couple of weeks of turbulence but that could provide a good buying opportunity. "Once the fund managers come to terms with the probability of a Labour government we should see a turnaround in the market; the FTSE 100 index wasn't even in existence when the last Labour government was in power"

Others disagreed; Mr Richard Jeffrey, group economist and British equity strategist at Charterhouse Tilney, the stockbroker, warned: "I expect the market to come off 5 per cent, or even more, between now and the election."

He pointed out that the yield on the US long bond is on the threshold of 7 per cent and would put pressure on British gilts which are currently around 7.6 per cent "and rising", he said.

Wall Street gave little comfort to European markets yesterday, with the Dow Jones Industrial Average sliding over 20 points not long after the opening. A stronger than expected rise in February housing starts was said to have prompted the fall.