Optimism blown away by worrying company news

Any lingering hopes of a follow-through from Tuesday afternoon's late rally by the FTSE 100, London's benchmark index, were blown away by more worrying company news from both sides of the Atlantic.

The downside pressure in London reached its peak just before lunch, with the FTSE 100 falling three figures at its worst, to 5,434.3, before rallying to finish a net 60.3 off at 5,476.5. With the depression in the leaders spreading right across the market, the FTSE 250 dipped to 6,118.3, prior to ending the day 34.9 off at 6,125.8, while the SmallCap lost 5.6 at 2,755.4 and the Techmark 100 18.89 to 1,570.54.

The bad news came initially from Cisco, the world's largest manufacturer of internet equipment.

It posted fourth quarter earnings broadly in line with market expectations, but spoiled the party by warning that revenues would fall further in the current quarter. Cisco also said that while business in the US was showing signs of recovering, both Europe and Asia continued to decline.

The Cisco news came after Wall Street had closed on Tuesday, with the Dow Jones Industrial Average putting up a reasonable performance and moving up 57 points, although the Nasdaq posted its third consecutive decline, losing 6 points.

Wall Street was never convincing yesterday.

An early 65-point retreat was followed by a good rally and another minor setback as London closed. And there was more confidence-draining news affecting European markets as Bayer, the German pharmaceuticals company, said it was withdrawing its anti-cholesterol drug after evidence of side effects.

That hit Bayer shares and caused a sharp sell-off in other drug stocks, including GlaxoSmithKline and AstraZeneca.

With the already struggling TMT (technology, media and telecoms) sector taking another battering no fewer than 15 out of the worst 20 FTSE 100 performance came from that grouping - all the main London indices declined, although they managed to finish above the day's lows.

While the losses in the market were heavy, dealers insisted that actual selling was never of any disturbing size.