The London market recovered from Tuesday's sharp retreat to close above the significant 6,000 level yesterday, but continuing jitters over interest rates prompted the market to surrender half its gains late in the day.
The recovery on Wall Street was one source of support at the start of trading in London. And sentiment was also helped by the Bank of England's quarterly inflation report, which allayed fears of an imminent rise in interest rates.
Publication of the report coincided with the release of what analysts suggested were inflation-threatening earnings and employment data. Average earnings growth in the three months to June ticked up to 4.4 per cent, while unemployment fell by a surprisingly large 33,000. But dealers instead chose to focus on the recovery in New York and the inflation report.
With Wall Street coming off the boil after a strong start, Footsie gave up some of its early gains to close 36 up at 6,014.40. In contrast, the FTSE 250 closed 1.1 down at 5,925.1 and the SmallCap index also declined, finishing down 3.2 at 2,709.
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