A profits warning from a leading US company rippled through to the UK equity market and left it struggling. Footsie, which had been up 35 shortly before the US market opened, ended the day with a headline fall of 3.6 to 6,387.1.
However, once the supportive effects of Vodafone AirTouch were stripped out, it was down 17 points.
US corporate earnings have been consistently strong over the past couple of days but yesterday Xerox Corp posted a fall in second-quarter earnings.
It also warned that profits in the latter half of the year would fall short of current expectations because recovery was taking longer than expected.
The news sent the Dow Jones Industrial Average down more than 100 in UK trading hours and the Nasdaq was off 120 - at worst a much greater fall than the Dow's in percentage terms.
It unsettled strategists who are already worrying about the quality of future earnings in a slowing economy.
And it undermined reasonably reassuring British news. On the corporate front J. Sainsbury released encouraging trading figures and BSkyB recovered earlier losses after comfortable subscriber figures.
Also, the warning added to the "old economy" nervousness highlighted in the latest industrial trends survey from the Confederation of British Industry.
The quarterly survey, which had been flagged by slimmer monthly reports, said business confidence and export prospects among British manufacturers had fallen at their fastest rate for more than 18 months.
Finally, the Xerox statement increased general worries ahead of two key clues to the direction of interest rates when the Federal Open Market Committee meets in late August.
First, the employment cost index today is being taken seriously because the last quarterly number was unusually high.
Second, the second quarter US GDP figure on Friday will set the seal on the past six months.
On the other hand, the underlying feel in Britain was torpor rather than panic.
Bonds were generally firm on both sides of the Atlantic. Dealers said that as there was cash looking for a home and an appetite to buy, the only effect of disappointing news was to delay the breakout from a staggeringly narrow trading range.
