The gloom surrounding London's equity market deepened yesterday in the wake of another dose of grim news from across the Atlantic, this time on the economic front.
The main UK stock indices continued to retreat, responding to a bleak assessment of the US economy contained in the Beige Book published overnight by the US Federal Reserve and which sets the agenda for the August 21 meeting of the Fed's rate-setting open market committee.
The contents of the Beige Book showing US economic growth grinding to a halt over the past month and more shocked Wall Street on Wednesday, triggering a big sell-off that drove the Dow Jones Industrial Average down 165 points, or 1.5 per cent.
Even worse was the performance of the Nasdaq Composite, which plunged back below the 2,000 level to finish 61 points, or 3 per cent, lower, registering its fourth consecutive decline in doing so.
And fears that Wall Street would take another tumble at the outset of US trading yesterday subsequently proved correct, and put additional pressure on London and other European markets, despite a late rumour that the Fed might execute another surprise rate cut between FOMC meetings.
The Dow dropped another 80 points early in the new session before rallying around the UK market close.
Dealers in London said the only consolation was that another cut in US interest rates after the forthcoming Fed meeting looks even more of a certainty.
At the end of the trading session the FTSE 100 was down another 73.6 at 5,402.9, having fallen to a day's low of 5,376.7, down 99.8, at its worst. Over the past two sessions the index has lost 133.9, or 2.4 per cent.
The FTSE 250 index, meanwhile, gave up 48.9 to 6,076.9, after a low of 6,064.4, while the FTSE SmallCap dipped 32.1 more to 2,723.3.
The Techmark 100 was by far the weakest of the main indices, plummeting 49.57 to 1,520.97
