MORE sustained downside pressure on international bonds, coming hard on the heels of last Friday's sell off in US bond and stock markets, proved too much to bear for Europe's equity markets, including London.
The latter had plenty of its own problems to contend with, not least the continuing potential and actual political flak flying from the Scott report, published last week. In the background, the market was increasingly worried by the implications of the resumption of the IRA's bombing offensive in London.
At the close the FTSE 100 index posted a loss of 26.6 at 3,744.3, extending the fall over the past two trading sessions to 35.5. Second liners, represented by the FTSE Mid 250 index, performed much better than their seniors, helped by another sizeable bid in their ranks, but still lost ground, the index shedding 9.9 to 4,190.0.
Dealers were by no means downhearted at the market's latest setback, pointing out that the 48 point slide in the Dow Jones Industrial Average on Friday, its third straight decline, occurred during the expires of a number of opt ions instruments and ahead of a long weekend break in the US. Traditionally US market moves tend to be exaggerated for both events.
The head trader at a leading UK securities house pointed to the relatively light turnover in London as proof that the institutions had not moved in to sell the market in any substantial size.
At the 6 p.m. count turnover was 515.1 million shares, the lowest daily total for some weeks. The lion's share of activity was seen in the non Footsie stocks which accounted for 60 per cent of the total. Customer, or retail business on Friday was valued at £1.9 billion.
Another senior trader said European markets had suffered from the lack of a lead from the US, where markets were closed for the President's Day holiday. "There was no real selling pressure in London" he added. "If there is any sort of a rally in debt products tomorrow, we should be fine it does not feel as if the market is down 26 points."
Market makers cut their openings prices to head off any attempted selling that could have been triggered by Wall Street's retreat on Friday. Starting the session at what turned out to be the day's best, the Footsie kicked off 15.4 down and retreated to a lob of 3,740.7 before stabilising.
There was evidence of profit taking and general selling of some of the recent so called takeover favourites, notably Ladbroke and Vickers, both of which were at the top end of the under performance tables in their respective indices.
Banks and insurances featured among the leaders, with National Westminster's purchase of Gartmore warmly received in the City.
