The absence of any US influences as Wall Street was closed for the Independence Day holiday had an adverse impact on turnover in London's equity market. The market itself put up a reasonable performance, with the FTSE 100 lower but never under any seriously damaging downside pressure, with the 250, SmallCap and Techmark 100 indices all managing small gains.
Dealers said the market was always likely to be vulnerable to profit-taking, especially after its spectacular late uptick on Monday afternoon, when the last few minutes of the trading session saw the FTSE 100 shoot up around 50 points, mostly due to a late flurry in Vodafone AirTouch shares.
And apart from some specific areas, notably the heavily weighted oil majors, banks and pharmaceuticals, there were some decent gains in many sectors.
Wall Street's splendid performance on Monday, which saw the Dow Jones Industrial Average post a three-figure gain and the Nasdaq Composite register a 25-point rise, failed to inspire London at the outset.
The session got off to a rather sticky start, with the oil majors BP Amoco and Shell sliding in the wake of reports that Saudi Arabia intends to increase its oil output by 500,000 barrels a day to try to drive oil prices down to more acceptable and sustainable levels.
Sentiment towards the oil sector was also affected by a cautious note sounded by Dresdner Kleinwort Benson. Other areas under pressure included the banks, which were hurt by research published by Deutsche Bank. It pointed out that the move by HSBC to reduce its standard variable rate for mortgages by 100 basis points could well be the beginning of the final act in UK mortgage competition.
The FTSE 100 was in negative territory all day and threatened to dip back below the 6,400 at one point, reaching a session-low of 6,405.2 before settling a net 53.4 off at 6,417.0.
The FTSE 250 index, however, clung on to a minor gain, finishing 3.7 ahead at 6,618.4. It was given a big boost by Eidos, the computer games group, whose shares shot higher on a bid approach from French group Infogrames Entertainment.
Biotech stocks, such as Cambridge Antibody and Biocompatibles, were other big winners in the midcaps. The FTSE SmallCap edged up 7.0 to 3,367.0, its best of the day.
There was precious little in the way of economic news for the market to work off, but that will change very quickly today, with the Confederation of British Industry publishing its June survey of distributive trades, and the Cips index of services industries.
