London's equity market turned distinctly wobbly yesterday, with, ironically, news of a formal bid for Abbey National from Lloyds TSB putting a substantial dent in both the predator's and prey's share prices.
And downside pressure on the bank sector helped drag the FTSE 100 lower yesterday.
Outside of the Abbey takeover story, there was plenty of corporate news to keep the market pot boiling.
But there was no doubting the main talking point in the stock market was the outcome of the Federal Reserve's open market committee meeting, which came well after the market close.
The FTSE 100 index closed back below the 6,300 level, dropping 37.0 to 6,297.5. The FTSE 250 index was dragged down too by the poor performance of the blue chips, eventually settling a net 15.2 off at 6,735.9, only a fraction above its low of the day.
The Techmark 100 index, bolstered by excellent results from ARM Holdings, the best performer in the FTSE 100, finished the day up 23.59 at 2,808.0.
The latest economic data from the US added to the calls for another substantial reduction in US rates. The advance forecast of annualised growth in US gross domestic product for the fourth quarter came in at plus 1.4 per cent, well below the consensus forecast of 2.2 per cent. Even more alarmingly, dealers said, the January Chicago purchasing managers' index to 40.2 from 44.7, compared with estimates of 43.0.
While the signs of an imminent recession in the US tended to cause raised eyebrows among London dealers, Wall Street showed no real signs of alarm. The Dow Jones Industrial Average pushed up strongly again, following up its overnight 179 points gain with a further 60 point appreciation just before London finished for the day.
The Nasdaq Composite, on the other hand, once again refused to emulate the Dow, following its near unchanged performance overnight with the narrowest of gains as the Dow accelerated yesterday.
Close scrutiny of the FTSE performance tables showed the banks weighing heavily on the 100 index with a mixture of competition concerns and worries about overpaying prompting a substantial declines in both Lloyds TSB and Abbey National.
Other bank stocks were said to have lost ground owing to profittaking ahead of the results season which kicked off yesterday with excellent results from Northern Rock.
Turnover in equities jumped to 2.4 billion shares by the 6pm count, boosted by exceptional turnover in Vodafone which accounted for 736 million shares.
