Technology stocks suffered another lurch downwards as a slew of factors prompted the FTSE 100 index to drop back towards the middle of its recent trading range.
Wednesday's big fall on the tech-heavy Nasdaq market in the US got the London market off to a bad start, as did reports that the Tiger hedge fund management group may be shutting operations.
Interest rate worries were never far from investors' minds. While the European Central Bank left rates on hold, there were hints from president Mr Wim Duisenberg that further monetary tightening was likely.
In the US, stronger-than-expected fourth-quarter GDP figures reinforced the view that the US Federal Reserve would have to continue raising rates.
And in Britain, the Nationwide's house price index showed a 2.3 per cent jump on the month and a 16.2 per cent rise on the year, reinforcing fears that previous interest rate rises had done little to slow the boom.
Investors are increasingly taking the view that the Bank of England will raise rates again next week.
With that prospect in mind, sterling moved ahead against the euro. The pound briefly jumped above 110 on the trade-weighted index, before closing at 109.9, while the euro briefly fell below 60 pence.
The FTSE 100 index was never in positive territory during the session and at one point, just before Wall Street opened, it was down 180.3 at 6,418.5. The normal end of tax year inflows from private investors do not seem to be helping the market much this year.
Apart from a surge above 6,900 in the last two months of 1999, and a flurry above 6,700 at the end of last week, Footsie has spent the bulk of the last year bobbing around in the 6,000-6,600 range.
The worst damage was sustained by the recent newcomers to the index. Four of them Psion, Celltech, Baltimore and Thus suffered losses of more than 10 per cent. They were joined by two companies from the telecoms, media and technology camp, software group Logica and Pearson, which owns the Financial Times.
The poor performance of shares in Lastminute.com since its flotation, and of some other high profile European technology issues, suggests that investors might be getting more choosy about technology stocks.
That might not be good news for some of the 30-plus tech new issues scheduled to float over coming months.
Market breadth was very poor, with 1,828 stocks closing down on the day and only 394 gaining ground. Volume was 2.07 billion shares by the 6 p.m. count.
