THE closure of much of continental Europe for the May Day holiday, plus the impending British local elections and US non farm payroll report for April, made for a quiet trading session in British equities. But it was the lack of any of the much heralded takeover activity that continued to take its toll on the market.
The FTSE 100 index took a couple of hard looks at the 3,800 level, but always rallied well and eventually finished the day a net 11.9 off at 3,806.0.
Second line stocks, which have left the leaders well behind since the start of the year, lost more of their shine, with the FTSE Mid 250 index posting its third consecutive retreat and ending the day 11.7 down at 4,540.1.
A handful of profits warnings, notably from Courtaulds Textiles, and General Accident, the composite insurer, gnawed away at the market's confidence, as did some more downbeat economic news, in the form of the Purchasing Managers' Index for April. The index fell for the third month running.
The news from across the Atlantic, where the National Association of Purchasing Management (NAPM) published its survey for April, initially depressed Wall Street, where the Dow Jones Industrial Average came under pressure. But sentiment there quickly picked up and the Dow was showing a 20 point plus gain an hour after London closed for business.
The NAPM details saw US Treasury bonds move up sharply after a difficult start, helping British gilts to end the day virtually unchanged, in spite of the pressure on the pound.
Commenting on the day's events in the market, the head trader at one European broking house said sentiment in London remained fragile. "The market expects the Conservatives to get a tanning in the elections and is looking for a further big rise in employment numbers in the US but it is a question of how much in both cases."
On the elections, he said the market would probably cope quite happily with losses of up to 800 local council seats, but that many more than that would trigger renewed and damaging stories about Mr Major's leadership into the general election.
Turnover in equities at 6 p.m. reached 790.4 million shares, a figure that surprised dealers but which was heavily weighted to non FTSE 100 stocks that accounted for more than 60 per cent of the day's business. And there was plenty of activity in the market's "penny stocks".
Around the individual sectors the composite insurers provided plenty of interest, with General Accident hard hit by the warning that profits would be badly affected by the weather which hit the company's main markets, Britain and North America, over the winter.
