Bullish news fails to lift languishing Footsie

There was plenty of corporate and economic news to keep the pot boiling in London's equity market yesterday. Much of it was on the bullish side, notably the news of a bid approach to Thames Water.

Unfortunately the bearish news proved more powerful and the FTSE 100 index was left with its 11th decline out of the past 12 trading sessions.

And the pressure accelerated alarmingly during the last 10 minutes of the trading session when the FTSE 100 plunged back below 6,300, with sentiment, already fragile, crumbling in the face of another sell-off on Wall Street.

Down almost three figures running up to the final few minutes of the day, the 100 index suddenly dropped to finish the day 123.6 off at 6,279.9. But it was at its worst two minutes before the official close, when it touched 6,259.7.

The downside pressure affecting the 100 index came as the market reacted badly to the surprise news that the Bank of England's monetary policy committee voted by the narrowest majority, five votes to four, to leave UK interest rates on hold at its September 6th-7th meeting.

That was the second successive five-four decision and came as a genuine shock to the market, which had to ponder the prospect of another rise in UK interest rates, especially if sterling dips against the euro.

The other persistent market worry concerned the continuing strength of crude oil prices, which resumed their upward path yesterday after another drawdown in US crude oil stocks. Strategists have been warning the market of the earnings implications of rising oil prices.

There was also strong evidence that the build-up of selling pressure in the market came from another spate of programme trades, all weighted to the sell side and which saw turnover in the market expand rapidly.

The pain being experienced by the leaders spread right across the market, with the FTSE 250 and the SmallCap, both in positive territory for much of the day, relinquishing their hard-won gains.

The 250 index, which rallied in the early part of the day with the help of the water stocks, crumpled under the pressure on cyclicals and because of the impact of the profits warning issued by a US company linked to British Vita.

Similarly, the FTSE SmallCap leapt ahead during the morning session, only to see a rise of 6.3 whittled away and eventually replaced by an 8.7 decline.

The Techmark 100, which drove up 70 points during the morning, saw its early gains almost eroded but managed to retain a closing gain of 10.65 at 3,770.23.