An early attempt at a rally in the FTSE 100 index proved short-lived yesterday as weakness in heavyweight stocks such as BP, Vodafone and GlaxSmithKline outweighed good performances from many old economy stocks.

And although the overall performance of the equity market was not as bad as some had feared, the FTSE 250 finished with a minor gain and the SmallCap was only marginally easier over the session, the background remained distinctly murky as investors continued to fret over the outlook for the dollar, Wall Street and the domestic economy.

Emphasising the problems facing the US economy, Ford, the car manufacturer, said it was cutting 4,000 to 5,000 white-collar jobs as part of a cost-cutting blitz. It also said that it would fail to reach analysts' forecasts this year.

That news sent Wall Street tumbling yesterday afternoon. The Dow Jones Industrial Average fell almost 150 points and the Nasdaq Composite lost more than 50 points.

London responded accordingly, the FTSE 100 falling sharply and briefly dipping below the 5,300 level only a day after dropping through 5,400 before stabilising and closing a net 47.7 off at 5,342.1.

The FTSE 250 was finally 0.8 firmer at 6,133.2, the FTSE SmallCap 5.8 off at 2,732.2 and the Techmark 100 9.85 lower at 1,493.81.

The London market's early uptick, which took the FTSE 100 up almost 40 points and back through the 5,400 level, came in the wake of a reasonable showing by Wall Street on Thursday evening, where the Dow Jones Industrial Average finished 46 points higher having been down 74 points at one stage and the Nasdaq added 11 points.

But niggling concerns over results from Hewlett-Packard and Dell, two US computer giants, began to erode London's early confidence and there was downside pressure on the cash market as index options contracts expired in mid-morning.

The latest market setback has seen the FTSE 100 close below its 20-day average and also below a key support level at 5,377, according to chart watchers. Turnover in equities was 1.74 billion shares.