Dismal weather fails to keep Footsie down

For those who believe in omens, it was not an encouraging day.

The south of England suffered its worst storms since October 1987 and many traders were lucky if they made it to their desks.

Back in 1987, of course, the storms that disrupted trading on October 16th were followed, three days later, by Black Monday. But there were few signs yesterday that investors were feeling superstitious.

The London market traded in a pretty narrow range all day.

At its worst in the morning, the FTSE 100 was down 58.6 at 6,307.9 but it recovered to close 21.9 ahead at 6,388.4. Small and medium-sized stocks also edged ahead with the FTSE 250 up 20.8 at 6.589.5 and the SmallCap 1.4 higher at 3,270.6.

Turnover reflected the poor market attendance. In the morning, it looked as if volume would fall short of the 1 billion share mark. But as more traders struggled in, 1.04 billion shares were traded by the 6 p.m. count, a solid effort in the circumstances.

International markets were fairly mixed with Asia lower and Europe slightly higher.

On Wall Street, the Dow Jones Industrial Average followed up Friday's 200-plus points gain with a three-figure rise in early trading. Weaker-than-expected third quarter gross domestic product figures have encouraged the view that US interest rates have now peaked.

However, the Nasdaq Composite was more than 100 points lower by the London close, with network equipment maker Cisco Systems dropping below $50 on a downgrade from Lehman Brothers.

The fall of US tech stocks weighed on the Techmark 100 index, which dropped 57.82 to 3,353.83. The Techmark is more than 40 per cent below its March high. Tech stocks made up seven of the worst 10 performers in the FTSE 100.

There was little in the way of domestic news to move the market. The consumer credit figures came in as forecast.

British Airways was the best performing stock in the FTSE 100 on the back of KLM's bumper figures. Invensys continued to be active on takeover speculation.

Analysts continued to talk up the prospects of the UK market, which has been stuck in a trading range since early 1999.

"The UK market looks cheap relative to history," said the latest global strategy note from HSBC.

"Excluding new economy sectors, the UK is currently discounting minus 1 per cent real earnings growth over the next 10 years." HSBC is forecasting 14 per cent UK earnings growth in 2000 and 8 per cent next year.

Paul O'Connor of Credit Suisse First Boston said: "While liquidity and valuation factors are the key to near-term bullishness on the FTSE 100, sentiment indicators provide further support.

"The CBOE market volatility index is often known as the `investor fear gauge'. It was recently at one of the highest levels recorded since measurement began in 1986. Pessimism rarely remains at this level for long."