A brave fightback by some of the leading British stocks - mostly prompted by some rather fanciful bid stories - took the FTSE 100 index back into positive territory for much of yesterday morning.

But that rally gradually ran out of steam over lunchtime. And it was completely erased as the Wall Street opening loomed and then reversed in a big way as another dose of worrying economic data from the US in the form of stronger than expected retail sales hit the US bond and stock markets. With the inflationary tenor of the US economic news now matching that from Britain in recent days, dealers and investors were quick to take evasive action.

The takeover stories being touted around in the FTSE 100 included a possible move against Allied Domecq by Pernod Ricard, while there were hints that an overseas buyer might be taking a hard look at Legal & General. Turnover was 1.18 billion shares.