UK rate rise takes wind out of market's sails

It was not a good week for London equities and yesterday was no exception. Lingering concerns about Wednesday's surprise UK interest rate rise continued to take the wind out of the market's sails. While investors were shocked by the decision of the Bank of England's monetary policy committee to nudge UK rates up by 25 basis points, it became increasingly clear that the institutions were also nervous about the outlook for US rates.

The FTSE 100 index, London's benchmark, moved erratically yesterday, with investors mostly standing back from the market for much of the session. Footsie registered a minor improvement at the outset, sustained by a reasonably good showing by Wall Street overnight, when the Dow Jones Industrial Average moved up 43 points. But equities were not helped by another advance in sterling, where the Bank of England's trade-weighted index nudged back up to 105.