The downside pressure affecting London equities spilled over into a sixth day yesterday and quickly encompassed the whole of the market place. It dragged down all the leading indices and finally brought the 11-session sequence of winning performances by the FTSE SmallCap index to a grinding halt. Although staging a strong rally towards the end of the day, the leaders still finished in the red - the FTSE 100 closing the session a net 9.7 off at 5,770.2, extending the decline over the six sessions to 242.8 or 4 per cent.
London was affected by the latest Bank of England quarterly inflation report, which was gloomy about growth prospects for this year, although it emphasised that British inflation should remain around the government's 2.5 per cent target for at least two years.
The prospect of more interest rate cuts in the pipeline encouraged some keen buying of general and food retailers.
The outstanding performance in the FTSE 100 came from BSkyB, whose shares rocketed after the triumphant success of the company's new Sky Digital television system, which is winning new customers at a faster rate than expected.
Dealers are bracing themselves for this morning's preliminary results from Lloyds TSB, the first of the big UK banks to report since the extreme turbulence in global markets towards the end of last year.
Tuesday's sell-off in the high-tech/Internet areas caused severe damage to related British stocks. Dixons fell heavily, while Psion also fell in a profits warning. Turnover at 6 p.m. was 960 million shares.
