A SPARKLING performance by the food retailing giants and the usual daily sprinkling of bid stories helped cushion London's equity market from another potentially severe drubbing yesterday.
Nevertheless, a big fall in shares on Wall Street at the outset of trading, amid fears of a substantial correction, saw London give substantial ground towards the close to register its fifth straight decline.
The FTSE 100 index retreated a further 15.7 to 3,707.3, extending its decline over the past three trading sessions to 110.6 points, or just short of 3 per cent.
Second line stocks were equally hard hit, with the FTSE Mid 250 index sliding 21.1 to 4,504,4, its sixth decline over the past seven trading days, during which the index has given up 64.2, or 1.4 per cent.
Dealers said London's fall was almost entirely down to Wall Street's recent bout of weakness, which in turn was attributed to a number of influential broking houses reducing their recommended exposures to equities.
Three of the leading Wall Street houses, Merrill Lynch, Smith Barney and Morgan Stanley, have adopted much more cautious stances on US markets this week.
Dealers also pointed out that London had also been helped by a strong showing by gilt edged stocks, which were commonly up around a half point in the wake of the regular monthly meeting between Mr Kenneth Clarke, the Chancellor of the Exchequer and Mr Eddie George, Governor of the Bank of England. Traders said that only a handful of super optimists had expected a cut in UK rates.
Senior traders said London would struggle to resist the downward pull from Wall Street. "There is talk of the Dow Jones Industrial Average falling back to 5,200 in the short term as stories of a US interest rate rise circulate," said one. He added that Footsie would take a look at 3,650 in the short term if Wall Street continued to lose ground.
Another said there were signs that the big hedge funds were pulling out of US stocks and shifting cash into Treasury bonds, which moved higher yesterday, and into various overseas markets.
Turnover yesterday reached an unspectacular 734.3 million shares, with non FTSE 100 stocks accounting for over 60 per cent of that figure. The total was lifted, marketmakers said, by a couple of trading programme executed in mid session.
