Intermittent flurries of profit-taking and a general feeling that much of the good news on interest rates is already factored into stock prices saw London's equity market retreat yesterday.

But there was never any great weight of selling pressure and the leaders finished well clear of the day's lowest levels, thanks to a burst of buying in the final minutes of the session.

That flurry of support saw the FTSE 100 index, which looked as if it would suffer a three-figure loss and finish below 5,400, rally over 30 points in as many seconds. It ended 57.1 off at 5,433.9, but at its worst it was down 91.9 at 5,399.1.

For the mid-caps and smallcaps, it was a case of marking time. Both categories drifted easier after an early rally ran into the sand. The FTSE 250 closed 7.2 down at 5,433.9 while the FTSE SmallCap ended 0.3 easier at 2,066.4.

The general lethargy affecting London was well illustrated by the relatively poor turnover level yesterday. By 6 p.m. only 710 million shares had changed hands, well below recent levels, even for a Monday.

Dealers said that, with last week's 50 basis points reduction in UK interest rates generally seen as the last piece of good news for the time being, the stock market would struggle to make any further rapid progress.

They also pointed out that the market was constantly on the alert for more profit warnings. There has been a steady flow of such warnings in recent months, which, combined with more expected analyst downgrades, may well upset share prices.

Optimists said one of the few remaining short-term attractions for the stock market - takeovers and mergers apart - was the prospect of another cut in US rates after the next meeting of the Federal Reserve's open market committee on November 17th.