The recent rally by the London stock market had to run out of steam eventually and investors duly decided to take some profits yesterday.

Even the record-setting performance of Wall Street on Monday and some healthy gains by Asian markets yesterday were not enough to maintain the bullish impetus.

The FTSE 100 index did manage a small opening uptick, gaining 33.7 to 5,881.7 within the first hour. But the trend was fairly quickly downhill after that, until the low for the day of 5,773, down 75.4.

With Europe also slipping back over the day and Wall Street losing some ground at the opening, Footsie faced an uphill battle. At the close, it was down 50.1 at 5,798.3, ending the run of three successive triple-digit gains.

For once, the medium and smaller stocks outperformed the blue chips. The FTSE 250 closed up 22.7 at 4,923.9 with the SmallCap 4.3 ahead at 2,064.7.

There was little in the way of corporate news, apart from some weaker-than-expected results from EMI and a profit warning from Sterling Industries. Parkland, the textiles group, became the latest small company to leave the market via a management buyout.

Mr Richard Bernstein at Schroders is worried the market has forgotten about the pressures on corporate profits. "Experience of the last economic downturn illustrates the sensitivity of operating margins and hence earnings to a combination of top-line pressures and rising unit labour costs," he says.

Volume was a very healthy 1.03 billion shares by the 6 p.m. count.