It was another down day for the UK market yesterday with all the main indices sliding for the second consecutive session.
At the close of trading, the FTSE 100 was another 127 off at 4,721.0, its lowest level since October 1998.
There was more pain in the FTSE 250, which lost another 85.3 to 5,177.7 and in the FTSE SmallCap, which fell 43.6 to 2,261.1. And the Techmark 100 lost another 36.06 to a record closing low of 1,163.33.
The market's problems did not initially emanate directly from the performance of Wall Street on Tuesday, which, although lower, did not have to endure any exceptionally downside pressure.
The Dow Jones Industrial Average finished Tuesday's session down 17 points. The Nasdaq Composite lost 24 points and the S&P 500 dipped 6 points.
But the rather benign morning session in London gave way to a more aggressive sell-off in the afternoon when the Dow began to fall away rather alarmingly - it was down 280 points shortly after London closed.
Early weakness yesterday stemmed more from the knock-on effects of news of big job losses at Boeing, the US aircraft manufacturer, amid fears of a downturn in aircraft orders. And there was bad news too from Cable & Wireless, which issued a profit warning, as well as Shell, which told a presentation to analysts and institutions in the Hague that it had cut its forecast for growth in oil and gas production to 3 per cent a year from the previous 5 per cent.
Overall, the mood in London remained gloomy, with some dealers pointing out that the market remained extremely nervous about the possibility of an early US military response to the terrorist attacks on New York and Washington last week.
"You get the feeling that the market may well hold up for the short term, but that any bad news will see it crack on the downside; the general view is that we might not have seen the worst of the current weakness," said one trader.
Ominously, Mr Brian Marber, technical consultant to the hedge fund group Odey Asset Management, said a close below 4,745.9 would form a flag pattern which implies a fall to 4,207.5 within two trading weeks.
