THERE was no let-up in the London equity market's stubborn refusal to get too excited by the latest domestic economic news, which showed a downturn in British inflation, or the latest upsurge on Wall Street.
The domestic fund management groups simply refused to be drawn into chasing British shares higher with the general election getting ever closer and the prospect of a rise in interest rates shortly afterwards.
Although an instant post-election interest rate rise is not seen as a certainty, few economists expect rates to remain on hold for long after the election result. Certainly, in the event of a Labour victory, a rise of 50 basis points is already pencilled in, at the latest following the scheduled June 10th mini-budget.
The inflation figures were slightly better than expected, the headline figure coming in up 0.3 per cent at 2.6 per cent on the year and the core number up the same at 2.7 per cent for the year.
Economists refused to get carried away by those numbers, insisting that they had been helped by weakness in food prices which accounted for all the 0.2 per cent fall in the RPI-X annual rate. As Mr Simon Briscoe at Nikko Europe put it: "It is a case of vegetables saving Clarke's bacon."
Dealers said it was becoming increasingly clear that it would take something special to budge the London market from its re-election lethargy.
Marketmakers insist there is very little downside pressure on share prices, but the institutions are not interested in buying the market so close to the election.
The FTSE-100 index made a token effort to move higher, and drove through the 4,300 level before losing momentum and slipping back into the red and stabilising before the close.
The index finished a net 4.3 firmer at 4,298.9. Second-liners struggled, the FTSE Mid-250 finishing 0.3 ahead at 4,524.9, while the SmallCap index rose 1.7 to 298.4
