Oil and sterling concerns keep market depressed

There was no respite for an equity market labouring under the wearying weight of the petrol crisis and continuing concerns over sterling yesterday.

The London market's benchmark index, the FTSE 100, fell away for the seventh consecutive session, continuing to gnaw at the rapidly disappearing confidence of the bulls who got so excited by the market's sudden rally around two weeks ago. That saw the FTSE 100 briefly top 6,800 on September 1st, when the TMT buying frenzy was at its height.

Sentiment yesterday remained stubbornly depressed as the market refused to acknowledge more encouraging economic news. Hard on the heels of the lowest monthly inflation figure since records began was news that average earnings for the three months to July came in below expectations and showed the lowest quarterly increase since June 1997. Unemployment fell to 3.6 per cent, the lowest level since October 1975.

Wall Street gave little help with a mixed performance on Tuesday when the Dow Jones Industrial Average rose 37 points and the Nasdaq Composite fell 47 points followed by a weak opening yesterday, especially by the Dow. That fell over 70 points not long after London closed for the day.

The FTSE 100 continued its downwards spiral to finish the day below 6,500, off 77.3 at 6,478.2, dropping below a couple of so-called resistance points in the process. At its worst, not long before Wall Street opened, the index recorded a three-figure decline. Over the past seven trading sessions the 100 index has fallen 319.9, or 4.7 per cent.

The FTSE SmallCap was another casualty, down 9.6 at 3,561.4, while the Techmark 100 remained unloved and settled 43.22 off at 3,921.35.

The only winner among the main FTSE indices was the 250, which struggled for much of the session only to emerge in positive ground at the end of the day, bolstered by excellent performances from a number of biotech and transport related stocks such as Securicor, Avis Europe and First Group.

Transport stocks also featured prominently in a FTSE 100 index which suffered from the effects of weak performances from the oil majors, BP Amoco and Shell and from Vodafone Group. Those three stocks accounted for around two thirds of the decline in the 100 index.

But the outstanding performances in the leaders came from an unlikely area, the retailers, where Marks & Spencer topped the list of winners as vague takeover speculation returned, followed by Kingfisher, which plans to split into do-it-yourself and general retail arms.

Turnover in equities was 1.79 billion shares, a figure boosted by a number of sell programmes.