There was more downside pressure on London stocks yesterday as markets continued to fret about the state of the US economy in the wake of the huge job losses highlighted in the US non-farm payroll report last week.
The job losses in the US shocked markets that had responded positively to some positive NAPM numbers for the services sector in the week.
London never looked comfortable and quickly embarked on a decline that gathered momentum throughout the day, with the FTSE 100, the UK benchmark, eventually closing just off its worst of the day and below the 5,200 level.
It was only last Thursday that the FTSE 100 topped 5,400 amid widespread hopes that the index was about to launch a pre-Christmas run at 5,500 and possibly even higher.
Behind that optimism was the good news from the war against terrorism and hopes that the US economy had already begun to respond to interest rate cuts.
At the finish of what was initially a session featured by low turnover and a general lack of interest, the FTSE 100 settled a net 79.7 off at 5,185.0, having fallen almost three figures to 5,172.2 in mid-morning. Dealers said that what worried the market was the extent of the weakness.
The FTSE 250 took another substantial hit, sliding back below 6,000 and eventually closing 65.3 off at 5,994.6, while the FTSE SmallCap retreated 7.1 to 2,662.7. But the worst performer among the main indices was the Techmark 100, which plummeted another 34.95, or 3 per cent.
Dealers are hoping that today's meeting of the US Federal Reserve's open market committee will deliver another cut in US interest rates. The market is looking for another 25 basis points off US rates which would be the 11th reduction this year and take rates down to 1.75 per cent.
Looking at the FTSE 100 winners and losers, British Airways staged a dramatic recovery, accelerating from being one of the worst performers to leading the winners' table.
Defensive sectors such as utilities and tobaccos were also being chased higher. Turnover in equities was a respectable 1.8 billion.
