Market Report - London

A mostly dismal week for London's equity market ended on a dull note yesterday as some relatively comforting US economic news relieved anxieties about the potential for the Federal Reserve to raise interest rates later this month.

The FTSE 100 index was down over 20 points, when news of a 0.3 per cent increase in US producer prices and a 0.4 per cent rise in retail sales during August was announced. Both figures were broadly in line with forecasts and injected much needed confidence into bonds and shares.

With US Treasury bonds instantly making strong progress, the gilts market, which had been trading five to six ticks higher, moved up well over a half-point at the long end, prompting a determined rally in equities in the early afternoon.

But after a day of bewildering and erratic moves, Footsie settled modestly lower, closing 6.6 off at 4,848.2, its fifth consecutive decline.

Wall Street, which had been expected to come under pressure in the wake of Motorola's profits warning, managed to climb 23 points in the first five minutes of trading.

It carried on up, peaking around 40 points higher, but then reversed abruptly to show a 40points fall as London closed.

Footsie fell 146.0, or 2.9 per cent, on the week. Over the same period, the FTSE Mid-250 gave up 50.2, or 1.1 per cent. The SmallCap, on the other hand, rose 1.1 points, thanks to switching from the leaders.