A spate of profit warnings blunted the equity market's cutting edge yesterday, reminding investors of the potential for unpleasant surprises and leaving share prices modestly easier on the day. Adding slightly to the market's discomfort was Wednesday's decline on Wall Street, where the Dow Jones Industrial Average lost touch with the 8,000 level, finishing 63 points lower.

Wall Street also caused further uneasiness in London when the US market kicked off yesterday. The Dow slipped by around 20 points shortly after trading commenced.

But dealers were by no means disheartened by the day's events, with some pointing out that all the main FTSE indices remain within striking distance of their all-time closing and intra-day highs.

Others adopted a more cautious view of the market's short-term prospects, pointing out that market-makers had filled in most of a large number of short positions and there was no longer the need for them to hoist prices to attract sellers. They also noted sterling's latest upward move.

The gilts market provided precious little help for equities yesterday, easing a few ticks early on, despite the successful auction of £1.5 billion sterling worth of 25year stock. They later edged higher to close virtually unchanged.

At the close, the FTSE-100 index was 11.7 easier at 5,065.5, while the FTSE Mid-250, which suffered two of the profits warnings, was 6.7 easier at 4,716.2.

The SmallCap, similarly burdened by warnings, managed a modest rise on the day, edging up 2.1 to 2,306.9.

Turnover in equities reached 899 million at the 6 p.m. cut-off figure and was boosted considerably by activity in Shell, which accounted for about 9 per cent of the overall total.

There has been exceptionally heavy activity in Shell since last Thursday when derivatives-linked business triggered large volumes in the cash market.