BRITISH shares fought back strongly to close with minor losses after coming under some hefty downward pressure for much of a difficult, tense trading session.
A strong opening performance by Wall Street galvanised an otherwise unhappy London market, which had been roughly handled earlier in the day amid widespread predictions of a rise in British interest rates later this week.
The Dow Jones Industrial Average staged another powerful performance early in the US trading session, climbing over 50 points to hit another all- time record.
There were suggestions that the Dow might have sufficient fire-power to drive trough the 8,000 mark.
But later, the Dow fell back equally rapidly to show just a 20-point gain 45 minutes after the London close.
The FTSE-100 index finished 2.1 lower at 4810.7 after clawing its way back from an early 36.4 fall, which drove the index back below the 4800 level.
But there was no such late relief for the market's second-liners and the smaller stocks which remained thoroughly depressed.
The FTSE Mid-250 index although well off its lowest level for the session - 4423.0 - was 26.1 down at 4426.9 by the close while the FTSE SmallCap ended the day 2.2 off at 2224.4.
Earlier the bad news over-shadowed the sparkling debut of the Woolwich, which yesterday adopted banking status.
Woolwich shares, like their previous demutualisation counterparts - Alliance & Leicester the Halifax and Norwich Union - kicked off their stock market career well above the most optimistic forecasts, before succumbing to flurries of selling pressure.
There was only limited support for equities from gilts, which managed to close unchanged to a shade lower, after a poor start.
The day's economic data, industrial production and manufacturing output, were much weaker than consensus forecasts.
The former fell 0.9 per cent during May against expectations of a small rise, while the latter dropped 1.1 per cent.
There were conflicting views among traders about the market's short-term outlook.
Some felt there were compelling arguments for a sell-off in British stocks because of the impact on profitability of a rising pound.
If the Monetary Policy Committee meeting on Thursday sanctions a rise in British rates, then the upward pressure on sterling would increase, it was said.
Others pointed out that the budget proposals of the Chancellor of the Exchequer, Mr Gordon Brown, specifically affecting trading in derivatives, had continued to cause substantial increases in market volatility.
On the other hand, a senior trader at one powerful independent broking house said there was a marked reluctance among the big marketmaking firms to run short positions in British stocks because of the likelihood of a sudden burst of corporate activity.
"There is some massive merger/bid business bubbling under the surface," he said.
