Chance of gains demolished by Wall Street's dismal show

Any chances of London's equity market extending its sequence of gains into a fourth straight session were demolished by Wall Street's dismal showing on Thursday evening and again yesterday. A series of damaging domestic and European blows added to an overall gloomy picture.

FTSE 250: 4,869.0 (-83.4);

FTSE SmallCap: 2,101.5 (-18.2)

The FTSE 100 index only just managed to stave off a 200-point retreat, closing 199.0, or 4.6 per cent, lower at 4,098.9. The FTSE 250 lost 83.4, or 1.7 per cent, to 4,869.0, the Techmark 100 21.58, or 2.7 per cent, and the SmallCap 18.2 to 2,101.5.

The damage done to still-fragile sentiment in London was a timely reminder to market bulls of the potential for further confidence-sapping disasters that have been such a feature of global markets in recent months.

Although well below recent daily levels, turnover at the 6 p.m. cut-off point still managed to top the 2 billion shares mark. Activity in derivatives was well below levels achieved earlier in the week when turnover in the FTSE future topped 160,000 contracts on Tuesday. Fair value for the FTSE 100 future expiring on September 20th was estimated at a discount of 7.91 to the cash market.

The bad news in the US on Thursday came in the form of poorly received numbers from various leading stocks. After Wall Street closed for the session, there was more bad news from Sun Microsystems and Microsoft, both of which lowered their full-year guidance.

The economic news from the US also disappointed, with the Philadelphia Fed Business Confidence Report much weaker than expected. Yesterday brought renewed weakness on Wall Street, in the wake of a worse-than-expected trade deficit for May.

Compounding the London market's woes was another quarterly loss from Ericsson, the Swedish telecoms equipment manufacturer. And, on the domestic front, the £278 million rights issue from Cookson, the specialist materials group, provoked a 33 per cent slide in the company's stock price.

The severest damage to the FTSE 100 was caused by the super heavyweight stocks such as the oil majors, pharmaceuticals, telecoms and banks. BP alone accounted for around 30 FTSE 100 points and Shell, another eight points, the latter despite being pushed by a number of brokers.