The two-day rally in the London stock market ground to a halt yesterday as another weak performance by the dollar was interpreted by the market as increasing the chances of a rise in US interest rates after the next meeting of the US Federal Reserve's open market committee on October 5th. The ensuing retreat in British equities proved to be of substantial proportions. The FTSE 100 index closed below the 6,000 level for the first time since early August, falling more than three figures at worst, and eventually settling 99.2 or 1.6 per cent off at 5,957.3. Weakness was not confined to the leaders either; the FTSE 250 dropped 67.4 to 5,787.4 and the FTSE SmallCap suffered a 21.6 reversal at 2,747.7.
On Wall Street, the Dow Jones Industrial Average dropped almost 200 points at the opening as fears of a US interest rate rise next month began to gather pace.
Turnover reached 1.18 billion shares, with FTSE 100 stocks accounting for 58 per cent of the total.
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