LEADING British shares ran out of puff yesterday after their recent exertions, with small pockets of profit-taking dragging the FT-SE 100 index down from its all-time high.

The weakness occurred despite plenty of good news, including an excellent outcome to the latest gilt auction, a relatively benign Confederation of British Industry Quarterly Trends Survey and a huge burst of activity in the telecoms/cable sector.

Dealers said the blue chips had been affected by Monday's late downturn on Wall Street, which re-awakened worries that the US market is becoming increasingly overvalued.

Footsie finished the day a net 15.9 off at 4,057.2 and was additionally burdened by a poor opening performance by Wall Street, where the Dow Jones Industrial Average showed a 29-point fall shortly after the opening.

But the selling pressure in the leaders, which was never more than light, did not extend to the market's second-liners. The FT-SE 250 index delivered a robust performance, closing 3.3 up at 4,452.7, although well below the day's best level, 4,460.1. Unlike the senior index, the 250 is still way off its all-time closing high of 4,569.6, reached in April.

The strength of the FT-SE 250 came in the wake of the creation of Cable & Wireless Communications, or as it has already been nicknamed in the market, "Supercable". Cable stocks occupied the top three places in the FT-SE 250.

The deal, which merges Cable & Wireless's Mercury Communications with the British cable interests of Bell Canada, Nynex and Videotron, was viewed as positive for all the parties involved.

Shares in Cable & Wireless were the best Footsie performers, but BT's were marginally weaker. Some telecoms specialists said BT could be weakened by a powerful attack on its market share by the newly created company. BSkyB, one of the market's best performers recently, also took a heating, with specialists pondering the growing threat posed to satellite television by the beefed-up cable group.

Such was the excitement generated in the market by the "Supercable" story that turnover in the telecom/cable stocks accounted for almost 18 per cent of total British equity volume.