The constant flow of confidence-eroding news from across the Atlantic was behind yet another widespread decline in London's equity market yesterday, extending the sequence of falls to a sixth straight session.
Dealers said there is now a very real threat that the FTSE 100 might drop back below the 5,000 level it rallied from at the end of October. "Then we'll see just how much support there is below that number," said one marketmaker.
Footsie dropped below 5,000 in the immediate aftermath of the September 11th terrorist attacks on Washington and New York, hitting a 41/2 year low of 4,433, before embarking on a rally to 5,411 at one stage on December 6th.
The blue-chip index staged a handful of attempts at a rally yesterday, struggling into positive territory on a couple of occasions, only to run into further pockets of selling pressure.
The early sell-off in London came after another steep decline on Wall Street on Thursday, when the Dow Jones Industrial Average fell a further 138 points and the Nasdaq dropped below 2,000, losing 64 points.
Profit warnings from a number of TMT (technology, media and telecom) stocks, plus a sharp fall in US retail sales, were behind the drop.
Yesterday brought brief periods of respite for the Dow, which was little changed as London closed, after a raft of US economic news - including data on industrial production, inflation and real earnings - which came in broadly in line with estimates.
At the close the FTSE 100 index was down 13.9 at 5,061.0, having reached 5,092.3 at its best of the day and 5,032.3 at its worst. That fall extended the decline over the six-day period to 308.8 points, or 5.7 per cent.
By far the worst performance of the main indices came from the Techmark 100, which dropped another 17.86 to 1,442.50, or 160.98 more than 10 per cent during the extended period.
Turnover in equities was a not unreasonable 1.86 billion shares, with telecom stocks heavily represented. Vodafone, sustained by Merrill Lynch which increased its price target for the stock, saw 284 million shares change hands, while mmO accounted for over 80 million shares traded.
