FTSE 100 Index: 5,118.6 (-18) FTSE 250 Index: 4,697.3 (-54.5)

The FTSE 100 index dipped below the 5,000 level for the first time since January yesterday as global markets continued to take a battering from US President Bill Clinton's troubles. But a rebound on Wall Street allowed blue-chip shares to rally in late trading.

Worries that Mr Clinton might be impeached, or forced into resignation, had sent the Dow Jones Industrial Average down 250 points on Thursday. With Asian markets following Wall Street down, the British stock market was faced with a difficult morning session.

At its worst, Footsie was 147.8 points off at 4,988.8 but there were signs that investors saw any level below 5,000 as a buying opportunity. The market bounced quite quickly, helped by indications from the S&P futures that Wall Street would rebound.

In the event, after a rather shaky opening by US stocks, the New York market rebounded on President Clinton's apology to religious leaders which made it clear he had no plans to resign his office.

Footsie ended the day 18 points down at 5,118.6, although that still left the benchmark below its end-1997 level.

The small and medium-sized stocks also suffered, with the FTSE 250 index dropping 54.5 to 4,697.3 and the SmallCap, already 25 per cent down from its peak, off 13.4 to 2,088.

Bank stocks were weak once again, on the back of concerns about exposure to emerging market debt.

Two leading investment houses have moved to cut their forecasts for the British market in the light of the recent sharp falls.

Credit Suisse First Boston has cut its forecast for Footsie from 6,600 to 5,900 for the end of 1998 and from 7,100 to 6,800 for end of 1999.

"Having been bulls of the market throughout the year, the events of the last month have proved a very bruising experience," admitted strategist, Mr Richard Kersley.

Meanwhile, HSBC has moved down from 6,000 to 5,400 for the end of this year and from 6,700 to 6,200 for the end of next.

Volume was a respectable 930.4 million shares by the 6 p.m. count of which 56 per cent was in non-Footsie stocks.