After the miserable start to the stock market week, there was every reason to hope the shock news that Bank of Scotland and Halifax were holding detailed merger discussions would provide the perfect backdrop for a rally.

But while the merger talks did trigger a wholesale advance by the two stocks and most of the rest of the banking sector, despite the nil-premium deal, the broad market remained hamstrung by the latest bout of weakness in the TMT sectors.

The extent of the weakness in the TMT stocks came as another surprise to the market. The telecoms stocks, which wield such massive influence in the FTSE 100, were driven down again by broker influences, the tech stocks were hit by US news and the media arena was under relentless downside pressure for various reasons.

Wall Street, which was partly to blame for London's initial reluctance to move ahead, could not be blamed for the disappointing finish to the session.

The FTSE 100 index was always in negative territory and down 52.1 at its worst of the day, sliding beneath the 5,800 level to hit 5,788.2, before stabilising and finishing the session a net 12.8 off at 5,827.5.

The FTSE 250 was never under any real selling pressure but, equally, never attracted any meaningful support, eventually closing 8.4 off at 6,308.6, while the FTSE SmallCap edged up 1.3 to 2,980.3. The Techmark 100 closed 22.68 down at 1,905.50.

The Bank of Scotland/Halifax merger talks story came out of the blue, dealers said, and provided some much-needed sparkle to the market, both shares racing ahead as a press report detailing the talks was confirmed by the banks.

On the downside, there was renewed selling pressure on Vodafone, the FTSE 100's most influential stock, as Merrill Lynch chopped its profits expectations and cut its price target price from 400p to 300p sterling, upsetting a share price already weakened by concerns about the big overhang of shares.

Turnover in equities was a rather disappointing 1.88 billion shares. Vodafone accounted for 21 per cent of the total.