Profit-taking rather than mixed economic data ensured that the London market came off the boil yesterday. After pushing the FTSE 100 index up 177 points in the previous two sessions, traders were keen to take some of the heat out of the market. Following a fall in the Hang Seng and some slippage in the New York equity market, London started weakly, setting the pattern for the day, but there were still some encouraging signs of strong support levels.
The Dow Jones Industrial Average held above 9,000 for the extent of the London trading session. And Footsie was down 34 points at worst, but it never dipped below 6,000.
The index ended the day 18 lower at 6,019.8, in spite of continued buying of the heavyweight pharmaceutical stocks. But the pressure at the top was not felt lower down the chain.
The FTSE 250 reached a new intra-day peak of 5,970.9 and ended the day 6.3 higher at 5,996.6, a new record close. The index responded to the latest bid in the hotel and brewing sectors.
News that Thistle Hotels had received an approach followed announcements late last week that Vaux and Ushers had also been approached. The SmallCap index also ended marginally higher.
Meanwhile a chart specialist at Investment Research of Cambridge said a break-out in the FTSE All-Share index suggested the broad index could now easily rise another 100 points.
A potential macro-economic impact on the market came from manufacturing and retail sales figures.
The British Retail Consortium said May's high street sales rose only 3.7 per cent year on year compared with the 5.7 per cent rise achieved in April.
"These figures," said Mr Michael Saunders of Salomon Smith Barney, "together with the CBI retail survey, point to a further slowdown."
The anti-inflationary signal from the sales figures was slightly offset by a 1 per cent jump in industrial production in April, the biggest gain for almost a year.
However, that blip was accounted for by a 7 per cent increase in utilities output, seen as weather-related.
And one analyst said the annual growth rate was sliding into negative territory for the first time in almost two years, with output dropping in fuels, metal and food, drink and tobacco.
However, dealers said the market was principally treading water following Monday's sharp rise.
June is traditionally quiet and traders predict even more stagnation this year as the World Cup grabs the market's attention. There was also a lull ahead of today's speech by Mr Alan Greenspan, the US Federal Reserve chairman, to the joint economic committee of Congress.
With investors hoping Britain has reached the top of its interest rate cycle, there will be keen interest in any hints about US rates.
Volume by 6 p.m. was just under 1 billion shares, relatively high by recent standards. The turnover was strongly skewed towards non-Footsie stocks. The blue-chip index accounted for 40 per cent of the day's total.
