Footsie slips in lacklustre trade

A POOR showing by Wall Street on Friday and again at the outset of trading yesterday put paid to the London equity market's strong…

A POOR showing by Wall Street on Friday and again at the outset of trading yesterday put paid to the London equity market's strong recovery at the end of last week and saw share prices under pressure yesterday.

There was no help to equities from the gilts market, which never showed any signs of rallying from an early decline ahead of this week's auctions of £3.5 billion sterling worth of gilts; £2 billion today and £1.5 billion on Thursday.

The FTSE 100 index moved decisively below the 3700 level, ending an acutely disappointing trading session a net 29.2 off at 3681.3 and ending three successive days of big gains in equities.

Second line issues fared just as badly as the leaders, with the FTSE Mid 250 index finally 19.0 off at 4231.0.

READ MORE

There was nothing really sinister behind the market's slide, dealers said, simply the fall out from New York and the general lack of enthusiasm among fund managers in London ahead of some important economic data on both sides of the Atlantic.

Tomorrow brings crucial details of British retail sales in June, expected by some observers to show a one per cent rise in sales during the month and lifting the annual rise to around 2.5 per cent. And Friday sees the second quarter gross domestic product figure released, with strategists pencilling in a 0.7 per cent rise during the quarter, or 2.2 per cent up on the year.

Turnover in London was a serious disappointment to brokers and marketmakers; at the 6 p.m. reading turnover in equities was a miserly 547.7 million, with non-FTSE-100 accounting for 60 per cent of the total figure.

The turnover figure was even more disappointing, traders said, given that one of the big market makers executed a sizeable programme trade during the late afternoon. The programme priced earlier in the day, was said to have been evenly weighted.

Senior marketmakers were dismayed with Wall Street's most recent performances and the response of European markets, and forecast a difficult few weeks ahead for the London market.

The consensus among dealers was that the odds favoured a US, rate increase during August, a move which would ultimately undermine sentiment on Wall Street and in London.

British Gas, so often a laggard in the FTSE-100, topped the performance league yesterday, with the gas regulator said by one analyst to be in "disarray" and back tracking on its draconian proposals for Transco, the pipelines division of the company.

Composite insurance stocks were well to the fore, as investors sought the stocks ahead of the interim season which commences at the end of the month.