THE slide in leading stocks on London's equity market was extended to a sixth straight session yesterday - but only just. There were strong gains across the market for all but the last two hours of the trading session.
Those were mainly because of a good rally across the financial sector which had suffered badly both before and after the flotation of Halifax shares.
London's early performance was all the more impressive in that it took place in spite of the concerns about potential interest rate rises in Britain and the US, as well as the uncertainty created by the July 2nd budget.
By the close, the FTSE 100 index had dropped 0.7 to 4,557.1, having been up 28.1 in midmorning, when the banks were responding to a flurry of short covering. There were, however, good gains across the second liners, represented by the FTSE Mid 250 which settled 5.8 up at 4,467.8. The Mid 250's strength just enabled the FTSE AllShare index to close fractionally higher, up 0.06 at 2,174.47.
The FTSE SmallCap, meanwhile, struggled all day and eventually finished at the session low of 2,277.1, burdened by severe falls in a handful of stocks such as Frost Group, Tunstall and Blick, where losses ranged from 12 per cent to 20 per cent.
Those falls more than offset big gains in TLS, the transport company, and Atlas Converting Equipment, the engineering group, which attracted bids.
Wall Street, whose overnight 22 point gain on the Dow Jones Industrial Average had been instrumental in helping British shares make early progress, came in easier yesterday. It took its cue from a marginally lower US Treasury bond market, following a bigger than expected increase in factory orders.
Bond weakness also stemmed from increasing anxiety ahead of Friday's nonfarm payroll report, which some observers fear may increase the calls for a rise in US interest rates. The next meeting of the US Federal Reserve's Open Market Committee takes place in less than a month.
"It was not an exciting day," lamented one dealer who said the market needed some corporate activity to shake it out of its current malaise. And he warned that the market was preparing itself for a "radical" budget which he is convinced would contain some "unpalatable medicine".
The excitement generated by the forthcoming Norwich Union flotation, scheduled for June 16th, continued to build with grey market dealings in the shares attracting heavy two way trading. City Index quoted Norwich shares at 347p-357p at the close, after a session high of 355p. IG Index quoted the stock at 345p-353p.
