The super-heavyweights continued to dominate the direction of London's benchmark index, the FTSE 100, yesterday, in another drama-filled stock market session.
But, while it was strong individual performances from the market's top two stocks by market capitalisation, BP Amoco and Vodafone Airtouch, that offset a collapse in BT shares on Wednesday, the reverse was the case yesterday.
BP Amoco and Vodafone Airtouch were both hit by developments connected with their multibillion pound takeover bids, for Arco and Mannesmann. BP Amoco's decline came after the US Federal Trade Commission blocked its bid for Arco, while Vodafone AirTouch suffered as German investors sold stock into the market An early upsurge in BT stock, prompted mostly by the view that the stock had been oversold after its dreadful third-quarter results and a warning of the erosion of market share and margins, subsequently came to nothing as the national telecoms champion suffered from an afternoon of determined selling pressure, much of it from the US.
Outside of those stories the stock market had to cope with two doses of bad news in the form of interest rate rises, firstly in the US overnight, and secondly from the European Central Bank in Frankfurt.
The 25 basis points increase in US interest rates came as no real surprise to the markets. The Dow began yesterday's session in good heart, climbing 76 points, before reversing and posting a 160-points decline an hour after London closed. Similarly dealers had braced themselves for a rise in rates by the European Central Bank, which nudged euro-zone rates up by the same amount. Dealers in London are now looking ahead to the third of the big interest rate decisions, the next meeting of the Bank of England's monetary policy committee, scheduled for next Wednesday and Thursday.
The day's domestic economic news caused few problems for the market. The purchasing managers' survey of services industries came in slightly below expectations, but the latest Halifax survey of house prices caused widespread unease, revealing a 16 per cent increase in prices over the past 12 months.
At the end of the session, the FTSE 100 posted a 21.5 gain at 6,324.3. Earlier in the day the index had launched itself at the 6,400 level, only to stumble within 6.5 of that figure.
Turnover was a massive 2.9 billion shares, boosted substantially by the near billion-share turnover in Vodafone AirTouch, thought to be the highest individual turnover on record.
