Business dried up on the UK stock market yesterday as cautious investors looked forward to the publication of the Bank of England's inflation report this week and the US Federal Reserve's crucial interest rate decision next week.
After months in which daily trading volumes regularly averaged 1.5 billion-2 billion, only 1.07 billion shares were traded by the 6 p.m. count yesterday. That was almost back to the levels of business seen during the first half of 1999.
A surge of interest among private investors and the enthusiasm for technology stocks carried trading levels to new heights in late 1999 and early 2000.
But stockbrokers have noticed a waning in business from private investors during the past three holiday-shortened weeks and the trend continued yesterday. Recent losses in the fashionable dotcom sectors may have discouraged some small investors. Traders also said that the spread between the buy and sell prices on FTSE 100 stocks was unusually wide yesterday, reaching around 10 times its normal levels in early trading.
The FTSE 100 index had a volatile start to the day, gaining 60.6 to 6,299.4 in the first few minutes of trading with help from rumours of a big bid in the banking sector before dropping to 6,174.3, down a net 64.5 an hour later.
There was not much help from Wall Street or Europe. The Dow Jones Industrial Average fell 50 points in early trading before recovering to be a few points higher when London closed, but by that stage the Nasdaq Composite was down more than 2 per cent. In Europe, the Frankfurt market London's new partner slipped 1.6 per cent amid weakness in telecom stocks after the weekend collapse of the planned merger of Telefonica and KPN.
Yesterday's fall in Vodafone AirTouch, the UK's largest stock, knocked 30 points off the FTSE 100 index.
All this left Footsie 22.5 points worse off, at 6,216.3, by the close. The Techmark 100 index of technology stocks was also weaker, falling 19.94 to 3,733.91.
There were modest gains, however, for the FTSE 250 up 29.1 at 6,308.1 and the SmallCap, 2.1 higher at 3,213.4.
The UK market remains in the bottom half of its recent trading range with little sign, as yet, of a sustained rebound.
