Early weakness on Wall Street turned a dull day for London into a disappointing one, with the FTSE 100 index briefly dropping back below the 5,400 level. Shares traded in a very narrow range during the morning as traders found the sunshine in London more alluring than returning to their desks after the long holiday weekend.

Next Monday sees the Labour day holiday in the US and markets are not expected to return to normal levels of activity until Tuesday next week. But investors were jolted out of their summer stupor by the publication of US consumer confidence figures at 3 p.m. London time. The data showed a surprise decline in the confidence index to 114.3, against expectations of a rise to 117.0.

The markets had been hoping that the US economy was past its worst but the confidence data hinted that problems had spread from the corporate to the consumer sector. That caused some early nerves on Wall Street with the Dow Jones Industrial Average falling more than 140 points during London trading hours.

The Dow's weakness quickly carried Footsie down, with the blue chip benchmark hitting its low for the day of 5,395.9, down 76.0, about three quarters of an hour before the close.

A modest recovery in late trading allowed the index to finish with a 37.7 loss at 5,434.7. The other indices were also weaker. The FTSE 250 fell 4.7 to 6,174.1, the SmallCap 0.3 to 2,728.5 and the Techmark 100 28.88 to 1,493.42.

The main excitement of the day came from the start of trading in Woolworths, after its demerger from Kingfisher. The shares performed strongly, closing at 333/4p after opening at 25p. Dealing was active in the stock, a familiar name to veteran traders, and 371m shares were traded by the 6 p.m. count, boosting overall turnover in the market to 1.85 billion.

Technology stocks had another bad day with CMG falling sharply ahead of its results and Terence Chapman Group issuing its second profits warning in successive months. TMT stocks made up 10 of the worst 12 performers in the FTSE 100.

With oil stocks also weak, the market had little upward momentum. Only four Footsie stocks rose by more than 2 per cent on the day and one managed a gain of more than 3 per cent.