Hopes that the bull market would start this week receded further yesterday as UK stocks recoiled after the latest corporate and economic news from the US.
The FTSE ended the day down another 23.2 at 5,406 as domestic data failed to offset gloom from Intel, the world's biggest microchip manufacturer and from Alan Greenspan, the chairman of the Federal Reserve.
However, chart analysts said the blue chips could fall another 100 points before they reached a support level.
The FTSE 250 dropped 34.6 to 6,079.1 and the SmallCap index 10.7 to 2,774.8. The Techmark 100 fell 6.94 to 1,553.7.
Intel published figures late on Tuesday night that were bad but no worse than analysts' forecasts.
Nevertheless, analysts said the outlook for the third quarter contained little to suggest the ailing chip industry was poised for recovery.
Then, yesterday afternoon, Alan Greenspan stood up in front of Congress to deliver his twice-yearly report on monetary policy.
The tone of the speech was generally downbeat. Mr Greenspan said interest rates had been cut so heavily because of "our judgment that a good part of the recent weakening of demand was likely to persist for a while and that there were significant downside risks even to a reduced central tendency forecast".
Also, the latest US data showed a stronger-than- expected rise in consumer prices and housing starts. The net effect was to send the Dow Jones Industrial Average down more than 100 points in early trading and push the Footsie down almost 50 by mid-afternoon.
The UK market was also hindered by a sharp downturn in the oil majors on news of unusually high US stockpiles and by further weakness in selected telecom stocks in anticipation of disappointing figures today from Nokia, the Finnish telecoms leader.
Options activity was very strong with Vodafone, BP, Astra Zeneca Glaxo SmithKline and Abbey National all featuring heavily.
