Heavyweight losses drag FTSE below 6,500

A glance at the performances of many of the largest stocks, such as Vodafone AirTouch, BP Amoco, Shell, Glaxo Wellcome and SmithKline Beecham, all of which were lower, explained the decline in the FTSE 100 yesterday.

There were no fundamentally bearish stories behind the losses in the FTSE 100's heavyweights, with the possible exception of the drug stocks. Dealers blamed pockets of profit-taking.

The FTSE 250 was also down, again not by much, while the FTSE SmallCap reversed Wednesday's decline to end modestly ahead, and the Techmark 100 nudged higher.

Wall Street provided no shocks to the market. On the contrary, the overnight gains in the Dow Jones Industrial Average and the Nasdaq Composite up 56 and 143 points respectively were followed up yesterday by further gains in both.

There was no significant economic news released yesterday, although markets in Europe and the US remained nervous ahead of today's producer price and retail sales news in the US.

Further out, dealers are acutely aware of next week's Humphrey Hawkins testimony to be delivered by Mr Alan Greenspan, chairman of the US Federal Reserve, to the US Senate on Thursday.

At the close, the FTSE 100 was down 42.8 at 6,475.7, having fallen 58.2 to 6,460.3 at its worst of the day, while the FTSE 250 was down 5.9 to 6,675.0, after 6,663.6.

Turnover in the market matched Wednesday's better levels, reaching 1.7 billion, although that figure was enhanced by a technical trade in National Grid, and a three-figure turnover in Vodafone AirTouch.

There was further keen activity in Legal & General, the general insurer, where turnover approached the 50 million mark as long-running takeover stories were fanned by press reports.

Meanwhile, Cazenove gave another reminder of its still-powerful position in London, as the bluest of blue-blood stockbrokers bought and easily placed 7.8 million shares in Daily Mail & General Trust `A'.

In its latest strategy and economics review, ABN Amro said "the market is being too complacent about the outlook for European Central Bank rates. We have therefore sliced our financials weightings and shifted into a mixture of value stocks and defensives".

Among UK stocks deleted from its core portfolio are Barclays, BP Amoco and Tesco. Additions include CRH, Electrocomponents and Nycomed Amersham.