Cautious investors ensure flat day

Dealers in London's equity market expressed relief with Wall Street's substantial rally on Friday evening when the Dow Jones Industrial Average fought back from an early 270-point slide to finish only 90 points lower.

That news was comforting enough to head off a further slide in British shares at the outset, despite further falls in far eastern stock markets, which saw Tokyo retreat another 3.4 per cent and Hong Kong down 2.2 per cent.

But with the big institutions increasingly reluctant to get involved in any significant alterations to their portfolios so close to the year end, there was precious little genuine investment activity, as witnessed by the poor turnover figure.

At the 6 p.m. cut-off point, turnover was 642 million shares.

The trading session finished with the FTSE 100 index marginally easier and down 2.0 at 5,018.2, after a day of more limited swings in either direction than has been the case recently.

The second line and smaller stocks, however, were always looking vulnerable, with marketmakers noting an almost complete absence of buying interest outside of the front line stocks; "If the institutions are reluctant to get involved in the leaders, then they are clearly not going to trade the smaller stocks; they will be moribund until the market gets back into full swing," he said.

The FTSE 250 closed 3.3 off at 4,701.8, while the FTSE SmallCap index dipped 2.8 to 2,292.3.

Wall Street gave London a decent push at the outset of trading in New York when the Dow Jones Industrial Average posted a 50points gain within minutes of the opening.

But US stocks lost some of their early gains and London dealers had to cope with a sudden flurry of programme trade activity, said to have been weighted on the sell side. The leading London shares duly drifted back.

"I doubt very much if there will be any aggressive position taking tomorrow (Tuesday) and there most certainly won't be any real commercial business on Wednesday, so we've effectively finished today," said the head salesman at one big UK house.

The day's economic news, showing a slight downward revision of third quarter gross domestic product, came as no surprise to the gilts market, and had little impact on markets generally.