THE effect of some strong US economic news, plus a series of programme trades, said to have been weighted on the sell side, combined to choke off what had been an exceptionally strong opening performance by British equities.
The bad news came after the British market's main indices had moved up to new all-time records on the back of strong hopes that domestic interest rates will be lowered after Mr Kenneth Clarke the Chancellor of the Exchequer meets Mr Eddie George, the governor of the Bank of England tomorrow.
But with Wall Street struggling manfully after an unhappy start, the FTSE 100 index ended a busy trading session a net 8.5 higher at 3,777.1, well short of its previous closing high, 3,781.3, reached on February 2nd. The index did, however, record a new all-time intra-day high of 3,792.5.
The FTSE Actuaries All-Share index reached another new record closing 5.76 up at 1,864.59. And the FTSE Mid-250 index gave another power-packed performance, racing up to finish 27.3 higher at a record close of 4,272.2.
The driving forces behind the Mid's showing came from yet another stunning performance from British Biotech, and from numerous bid targets. Of these NYNEX, the cable television group, jumped almost 6 per cent.
A 0.5 per cent rise in US factory goods orders, which compared with a consensus forecast of a 0.5 per cent fall, did the damage in US bonds, which fell around three-quarters of a point in early New York trading.
With bonds pressured, US equities struggled and the Dow Jones Industrial Average was down 20 points shortly after the start, before stabilising and moving into positive ground after London closed.
Earlier, British stocks had made rapid progress, basking in the reflected glory of Wall Street's overnight 63-point upsurge.
But with the bond markets starting to flag, the sell programmes began to bite into the market's confidence. From its record, Footsie retreated to a session low of 3,771.9, only 3.3 up, before steadying with Wall Street.
Manchester United's victory over table-topping Newcastle United threw the Premier League championship wide open again and saw the former's shares climb 13p to an all-time high of 280p; bookmakers installed United as the new favourites to take the league title.
BAA and British Airways took the honours in the FTSE 100 performance table, with both stocks up over 3 per cent, the former after a spate of broker buy recommendations and the latter after excellent February traffic numbers.
On the downside, the big oil stocks shuddered amid talk that Iraq may sell up to $2 billion worth (£1.27 billion) of oil on world markets.
Boosted by the programme trade activity, turnover in equities expanded to 863 million shares.
