All the main indices in Britain were under renewed pressure for the fifth consecutive session and the Footsie slipped below the 5,100 level for the first time since the start of November.

But hope of a cloud break was dashed by the latest high-street data from the US and the damp feeling in London continued. Wall Street had been supportive on Wednesday evening, with the Dow Jones Industrial Average finishing in positive territory and the Nasdaq Composite clinging on to the 2,000 level.

Initially, the latest problems for London were purely domestic as telecom, media and technology stocks all traded lower.

There was a worrying trading update from Logica, the computer software group, which announced that its core British business had been weak and cut its forecasts for its text-messaging arm. There was also news of a big placing of BSkyB shares, carried out by Deutsche Bank on behalf of Vivendi, the French utility and media group, at a substantial discount to the ruling market price, to fund strategic partnerships.

British retail sales figures for November were surprisingly strong, which cast doubts on the likelihood that the Bank of England would cut interest rates soon. While that news triggered plenty of support for general and food retailers, the latest survey of industrial trends found order books were affected by the slump in British manufacturing.

Footsie was off 50 and needing no more than a local anaesthetic when the latest US retail figures emerged. Those figures showed that a slump in car sales, despite the heavy discounts offered after the September 11th attacks, had caused the overall figure to be down by 3.7 per cent against forecasts of a 2.5 per cent fall.

Also, Lucent Technologies' trading statement predicted losses greater than even the most pessimistic forecasts.

The overall effect was to take more than 100 points off the Dow Jones Industrial Average shortly after the start of US trading and shift the Footsie down to 5,035. The debate is now whether the headline index will remain above 5,000 at the end of the year.

Dealers say many of the big investment houses, which have made keen short-term gains from the market's recent recovery, have now shut up shop for the year. This leaves the way open for rumour-driven volatility which is likely to increase over the Christmas period when volumes die away.