Hopes to achieve 6,000 level fade into distance

The London market's winning sequence of six consecutive gains in the FTSE 100 finally ran out of puff yesterday, with the 6,000 level looking ever more distant. At the close, the FTSE 100 index was down 79.2 at 5,897.4, while the FTSE 250 dipped 8.8 to 6,663.7 and the Techmark 100 50.11 to 2,116.75.

Yesterday's disappointing performance came in the wake of a dismal showing by Wall Street on Tuesday evening where an 80-point slide in the Dow Jones Industrial Average was only partly offset by a more resilient Nasdaq Composite. That ended the session a few points higher.

On the economic front the minutes of the last meeting of the Bank of England's monetary policy committee (mpc) showed that only one of its members, Sushil Wadhwani, had voted for a 50-basis points reduction in rates. The rest voted for 25 basis points.

But while the positives on the prospects of at least one more cut in UK rates, emerging from the mpc minutes, kept the bulls' spirits up, it was the liquidity argument that was being put forward with some force by the market's bears.

Vodafone, a close second to BP Amoco in terms of market capitalisation, was under pressure after Morgan Stanley Dean Witter chopped its price target for the group, to 260p from 335p, adding to the downside pressure on that stock.

BT continued to suffer too, its shares sliding another 4 per cent as the worries about its rights issue take-up continued to drive the stock price lower. Dealers insisted that the stock overhang in Vodafone, some 3.5 billion shares, plus an expected shortfall in the BT rights issue take-up, of possibly 250 million shares, would account for around 8 billion of liquidity being drained from the market.

"There is no real surprise that the FTSE 100 has found it so difficult to drive back through 6,000 with such an overhang. Footsie can't make progress unless Vodafone makes progress and Vodafone can't make progress until its stock overhang is cleared," said one salesman. And he pointed to the likely shortfall in the take-up of the BT rights issue as being another drag on the market.

Turnover in equities was 1.94 billion shares.