Slumping business confidence and a big portfolio readjustment left the London market down for the sixth day in a row.
But after sliding almost 350 points since the beginning of last week, the FTSE 100 index was showing signs of flattening out.
The blue-chip index ended 0.3 lower at 5,835.8. The FTSE 250 was off 20.4 at 5,477.0 and the SmallCap down 16.5 at 2,489.9.
Macroeconomic pressure emerged in the shape of the latest Confederation of British Industry trends survey, which reflected the lowest level of business confidence since 1991.
A slide in industrial optimism had been well flagged, but the headline figure of minus 44 represented an even darker cloud than bearish strategists had predicted.
Mr Richard Kersley, the CSFB strategist, who remains one of the market's enthusiasts with a 6,600 forecast for Footsie this year, was quick to point out the potential for a silver lining.
"You can't get away from how weak this number is. It dovetails with the recent figures from ICI and a raft of downgrades," he said.
"However, there are obvious implications for the policy makers ahead of the Bank of England's monetary policy meeting next week."
Other financial markets appeared to agree. There was a rally in short sterling, one of the most sensitive plays on the direction of future interest rates. Gilts were also stronger and sterling fell by two pfennigs against the Deutschmark.
Nevertheless, no sooner had the market taken a brighter view on the data than technical selling kicked in. The disposals involved several Footsie stocks including Shell Transport, Marks & Spencer, Hays and British Land.
Traders said heavy lines of stock were placed at a big discount to the prices shown on the screens. For example, one said a block of 12 million shares in British Land was placed at 512p a share when the price on the screen was 550p.
The selling was carried out through various brokers and believed to represent a significant portfolio adjustment by one big investment fund.
The director of sales trading at one leading European securities house commented: "There was a selection of big lines that various houses got involved in and that hit the market. But, by the close, the selling was known about. It was discounted and it was in the price."
