BRITISH equities fought their way back to end a difficult trading session in positive ground, but only after a nudge in the right direction from Wall Street which made useful progress at the outset of trading in the US.
Prior to Wall Street's opening, the London market was always being pressured on the downside and scratching around for buy side impetus.
By the end of the day, the FTSE 100 index showed a 7.3 gain at 3,954.0, a clear demonstration that the afternoon influx of money into London, mostly from the US, had been concentrated on the highly liquid stocks.
The FT-SE Mid-250 index, comprising the market's second line stocks, failed to attract any great weight of the overseas cash, however. The 250 index never recovered from a nervous opening, and eventually closed only a fraction off the day's lowest level, finishing 15.1 down at 4,391.1, after touching 4390.4.
The negatives for London came with the final trading session of the third quarter. Most of the big institutions spent last week tidying up and making the final adjustments to their portfolios.
"The institutions put the finishing touches to their holdings, but there was precious little more to the market than that," noted one senior trader.
London's poor showing at the start of the day came in the wake of the latest call for a windfall profits tax on the privatised utilities from the Lab our party. The threat of an even more stringent tax on the utilities saw sector constituents comprise the five worst performers in the FT-SE 100.
Utilities analysts were surprised at the market's reaction to the windfall tax threat. Labour has been waving a big stick at the utilities since the late 1980s. This is nothing new," said one specialist.
The FT-SE 100 made a halfhearted attempt to go better at the outset, but quickly ran into small pockets of selling as trading got underway.
There was some surprise in Europe at Wall Street's good opening performance which saw the Dow Jones Industrial Average up over 30 points not long after the start of trading, despite an easier trend in Treasury bonds.
Marketmakers were impressed with London's afternoon rally. "There was very little selling pressure early on, but equally little buying interest. We could move higher, although Friday's non farm payroll will be watched very carefully to see if the Fed made a mistake in holding US interest rates," said one.
Another said he felt politicians on both sides of the Atlantic would not want to say anything that would rock the markets and therefore create more problems for themselves.
