Bank of England dashes hopes of another rate cut

It was a day of mixed fortunes for the London stock market yesterday, with the Bank of England's monetary policy committee dashing lingering hopes of another cut in British interest rates on its second birthday.

To make matters worse for an equity market struggling to recover from its two-day setback, Mr Alan Greenspan, chairman of the US Federal Reserve, upset Wall Street and markets around the globe. Addressing the annual conference of the Chicago Federal Reserve, Mr Greenspan warned of the possibility of inflationary pressures re-emerging if US productivity growth slows.

The Dow Jones Industrial Average opened under pressure and fell further during London trading hours, posting an 80-point fall shortly after British traders closed their dealing books.

But the British market's resilience shone through just before the close when pulses of buying activity helped the 100 index rally again to finish a net 4.9 up on the day at 6,406.6.

Earlier, the London market had recovered from mild disappointment over the monetary policy committee's decision to adopt a wait-and-see policy on rates. That disappointment - which lopped 15 points off the FTSE 100 index within minutes of the committee announcement - did not last long.