At first it looked like Mr Alan Greenspan had pulled it off again. Comments on inflation by the chairman of the US Federal Reserve led to a rise of more than 3 per cent in the Dow Jones Industrial Average late on Wednesday and a consequential jump of more than 100 points in the Footsie first thing yesterday.
However, severe concerns about a US hedge fund, data showing the worst British manufacturing output for five and a half years and the announcement of big losses for one of Switzerland's most established banks proved too much.
The FTSE 100 index turned around and slid back throughout the morning and afternoon to close 47.1 lower at 5,167.6 after a two-day rise of 224.4 points. Evidence that the pressure was more macro-economic than British-generated came from the more domestically-based indices. Both the mid-cap and small indices ended higher on the day. The FTSE 250 rose 16.1 to 4,580.3 and the Smallcap edged ahead 0.2 to 2,032.8.
The first blow to the London market was the revelation that LongTerm Capital Management, the US hedge fund, was being bailed out to the tune of $3.5 billion.
On its own, the rescue operation was not significant but as a taste of things to come it was seen by one strategist as "a harbinger of systemic risk that is now becoming very scary".
And Mr Richard Coleman, financial analyst at Merrill Lynch, said: "There are several thousand hedge funds in the world. How many more of them need to be bailed out?"
Shortly afterwards, the Confederation of British Industry presented data that pointed to slowing domestic demand and export orders at their lowest level since 1983. The combined figure was, said the CBI, the most negative since February 1993.
The data were largely in the market and taken more as a disincentive for optimism than a reason to sell.
But they were followed at lunchtime by news that UBS, the Swiss bank, was to make an announcement shortly before the close of British trading. Speculation ranged from the bank making a bid for a rival such as JP Morgan or Morgan Stanley to news of big losses linked to the US hedge fund problems.
In the event, UBS came out with a warning, which sent a shudder through investment banks already worried about their own trading picture, of wide-ranging losses.
"For anyone working in this industry," said Mr Richard Kersley, of Credit Suisse First Boston, "one finds it a sobering experience."
The general picture was not encouraging British funds to pick up stock and one head of sales trading suspected the big institutions had decided to write off the current quarter and sit on their hands until the final quarter opens in a week's time.
Nevertheless, there were buyers around - particularly from overseas - to mop up the profit-taking, and two-way business saw volume jump to 1.15 billion shares by 6 p.m., the top of the near-term range. Turnover was boosted by some big tax-related trades in BTR and heavy switching in Tesco and Asda. Between them the three stocks accounted for more than 115 million shares.
Grocer Asda said it was looking at ways to improve its business but stopped short of the total stores revamp which some analysts and investors had been expecting. Shares lost 7 1/2p to 167p. Two of the other big three chains headed down too as Safeway dropped 9 3/4p to 300 1/4p and Sainsbury lost 4p to 549p. Marks & Spencer fell 7 1/2p to 436 1/2p.
Despite reports that full-year results are in line, fish & chip group Harry Ramsden's shares fell 20p to 195 after high fish prices, the World Cup and an underperforming Melbourne operation affected margins.
Filofax Group - the company behind the personal organisers that became symbols of so-called yuppies in the 1980s - received a surprise £47.9 million takeover bid from its American equivalent. Filofax surged 62 1/2 p to 202 1/2p.
