FTSE indices dented by further TMT sell-off

It was always going to be a difficult start to the week for London after the extremely painful setback that affected the former high-flying TMT stocks at the end of last week.

In the event, things were never that bad in the leading stocks, especially the old economy areas, but the market picture was looking increasingly murky towards the close of trading.

As the curtain came down on trading in London, the Dow Jones Industrial Average was down over 200 points and the Nasdaq Composite, heavily burdened with US TMT stocks, fell by a similar amount as the US market continued to creak at the seams.

Wall Street's woes were twofold, with the main downside pressure coming from worries that last week's 50 basis points rise in US interest rates will be followed up by another 50 basis points increase after the next meeting of the US Federal Reserve's open market committee scheduled for June 28th.

But the worries about the new economy also bore down as heavily on US stocks as in London.

The withdrawal of the proposed flotation of Yes Television was the second time the issue has been pulled because of the hefty sell-off in TMT stocks.

This was being viewed as another body blow to the new economy stocks, coming hard on the heels of the failure of Boo.com, the internet retailer.

The London market's benchmark, the FTSE 100 index, briefly dropped through 6,000, hitting a session low of 5,991.9 when Wall Street was looking increasingly threatened, before rallying quickly to finish the day a net 9.9 easier at 6,035.5.

But it was a gloomy picture that enveloped the rest of the market, with the sell-off in high-tech/Internet stocks reverberating around the City and infecting all the FTSE indices.

Worst of all, predictably, was the Techmark 100 which followed up last Friday's record 8.7 per cent decline with a further steep fall, closing down 126.5 or 4.1 per cent at 2,925.67.

That loss extended the decline over the past four sessions to 591.34 or 16.8 per cent. Since hitting a record 5,743.30 on March 6th, the Techmark 100 has fallen 49 per cent.

The other FTSE indices were also being hit hard by weakness in tech-related stocks. The worst performers list in the FTSE 250 was swamped by tech stocks as was the FTSE SmallCap.