WORRIES that the overnight slide on Wall Street would trigger a Europe-wide setback of substantial proportions happily proved well wide of the mark yesterday.

London's market-makers took the expected avoiding action, chopping their initial dealing levels, and effectively pulled the rug from under potential sellers of shares. Investors took one look at prices being offered and decided to see how markets developed.

In the event, the market's concerns that Thursday's US retail sales figure might be followed up by strong producer price data proved unfounded and a sharp rally in US Treasury bonds was followed by a determined rally in US stocks. London, like other European markets, took its cue from Wall Street, and spurted forward the moment the US producer price data came in well below consensus forecasts.

The FTSE 100 index finished 26.6 higher at 4,424.3, wiping out an initial 46.7 decline. The second line and small cap stocks did not fare as well as the leaders, however, because the big fund management groups preferred to position themselves initially in the highly liquid Footsie stocks.

The FTSE Mid-250 index which fell 37.5 to 4,682.7 at its worst, shortly after the start of trading, rallied well, but still closed the day 12.3 off at 4,707.8. The SmallCap dropped to a session-low of 2,362.5 prior to stabilising to end 8.9 off at 2,365.2.

Over the week, the FTSE 100 index rose four points and the SmallCap 2.5, but the Mid-250 index lagged behind, slipping 6.0.