A raft of economic news provided only temporary respite for London's equity market yesterday. The news was interpreted as reducing the chances of the Bank of England's Monetary Policy Committee recommending a rise in UK interest rates after their next scheduled meeting on May 6th and 7th.

But by the end of the day the FTSE 100 had seen an early 40point rise transformed into a 23.9 loss, with the index settling at 5,931.1.

Early in the session, an upsurge in the leaders had driven the FTSE 100 to within 5 points of the 6,000 mark, only minutes after trading commenced. The index stayed in positive territory until the early afternoon, when pockets of profit-taking proved too much for the market to bear.

But an unconvincing opening by Wall Street saw London fall further, registering a session low of 5,918.5, down 36.5, before stabilising just before the close.

Dealers insisted, however, that the market's depression was confined to specific stocks and specific areas like pharmaceuticals and insurances. "It was a quiet and difficult day," said one market-maker.

The mood in the stock market at the start of the day was also helped by comments on Tuesday evening from Mr Eddie George, governor of the Bank of England.

Further support during the morning session came from Wall Street's overnight move to another record high on the Dow Jones Industrial Average, which was lifted by some well-received results from IBM, the computer giant.

Underlying British average earnings in the year to end-February rose by 4.5 per cent, in line with market forecasts, while the March unemployment rate fell to 4.9 per cent, the lowest level for 18 years.

M4 money supply rose 9.5 per cent in the year to end-March, in line with expectations.

The interest rate story hit gilts heavily, where losses at the long end of the market extended to more than a full point. Sterling, measured by the Bank of England's exchange rate index, finished marginally easier. The setback was generally confined to the leaders, however, with the FTSE 250 extending its recent gains and pushing up to hit an intra-day and closing record of 5,570.5, up 27.1. The FTSE SmallCap edged ever-closer to its previous highs, finishing 3.1 firmer at 2,634.1 Much of the damage in the FTSE 100 was caused by a serious setback in the composite and general insurance sectors after Tuesday's warning from Commercial Union of big claims arising from the recent bad weather in the UK and elsewhere.

Weakness in the four composites, Commercial Union, General Accident, GRE and Royal & Sun Alliance, plus general insurers Legal & General and Prudential accounted for more than 10 FTSE points.

Poorly received preliminary results from Bank of Scotland saw those shares retreat the equivalent of 2.5 FTSE 100 points.

The most severe fall came from Glaxo Wellcome, which accounted for more than 12 FTSE 100 points.