The UK stock market inched lower yesterday, as traders marked time ahead of the big decision of the week - the Bank of England's interest rate announcement on Thursday.
Sentiment in London was given a lift by Friday's strong close on Wall Street, where the Dow Jones Industrial Average regained the 9,000 level, and by a near 4.7 per cent jump in the Hong Kong market.
The FTSE 100 Index accordingly reached its best level of the day, up 42.9 at 5,624.8, in early trading but it was slow going for the rest of the session.
The latest UK data reminded investors of the weak state of the economy, which some analysts believe is already in recession. Manufacturing output fell by 0.4 per cent in October, bringing the annual decline to 0.5 per cent. Industrial production was flat on the month.
The figures helped reinforce the view that the Bank of England's monetary policy committee will cut interest rates by a quarter or a half of a percentage point.
The rate decision looks increasingly like the last important event for the UK market before traders start winding down ahead of the Christmas holidays and the introduction of the euro in the new year.
Rate cut expectations helped sterling slip back below 100 on the Bank of England's trade-weighted index, giving some much needed cheer to the hard-pressed exporting sector.
On the corporate front, the main news was the takeover of US utility Pacificorp by Scottish Power. However, the deal did nothing for Scottish Power's shares and offered no support for the overall market.
Volume was a sluggish 669 million shares by the 6 p.m. count, of which 48 per cent was in non-Footsie stocks.
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