Footsie undergoes a painful session

London shares had to endure a painful session yesterday, with sentiment, already weakened over recent days, given a thorough shaking after further substantial weakness in overseas markets.

The proximity of some crucial economic news from both sides of the Atlantic added to the nervous mood. The Bank of England's monetary policy committee meets on Wednesday with its decision on interest rates due at midday on Thursday.

And the US non-farm payroll report for May, one of the most closely watched economic news items of the month, is scheduled for Friday.

But London stocks did stage a robust rally not long before the close of trading. The FTSE 100 finished the day a net 32.8 off at 5,837.9, having lost the 5,800 level earlier in the session and posted a near three-figure slide in the process.

Similarly, there was relief for the market's second- liners where the FTSE 250, down 20.2 to 5,881.2 at worst, around midday, subsequently made rapid progress to close only 2.5 easier at 5,898.9, although some dealers attributed that index's late rally to late uncommercial trades .

Against the recent trend, the market's smaller companies took something of a pasting, the FTSE SmallCap index stubbornly refusing to mirror the late-rallying performances of the FTSE 100 and 250 constituents, and closing 11.3 lower at 2,761.8, only a fraction above the session low of 2,716.6.

The late rush of buying in London markets was attributed by dealers to Wall Street's good showing yesterday, where the Dow Jones Industrial Average posted a 50-plus gain not long after UK markets finished.

Wall Street's performance came after weaker-than-expected economic data, notably the NAPM for May. That came in at 51.4 per cent compared with April's 52.9 per cent, an indication of a slowing in the US economy.

That was a clear pointer, so traders said, that the Federal Reserve might not need to increase US interest rates after the June 30th meeting of its open market committee.

At the 6 p.m. cut-off point, turnover reached 651.4 million shares, with non-FTSE 100 stocks accounting for 62 per cent of the total.