A sharp early fall on Wall Street, and a rebound in sterling, eventually negated the effect of a rally in one of the market's leading shares, Lloyds TSB, yesterday. The FTSE 100 index ended the session 8.2 points lower at 4,899.3.

Morning trading was driven by a powerful performance from Lloyds TSB, one of the select band of banking stocks which have been leading the market higher all year. Investors were impressed by margin growth and by a bullish statement from the chairman. By midday, the rise in Lloyds TSB shares was responsible for virtually all of Footsie's 20 point gain.

With Unilever results also well received and with the British purchasing managers' index showing no sign of inflationary pressures, the market looked like ending the week in good shape.

However, hopes that sterling's period of strength might be over, aroused earlier in the week, were dashed as the pound gained three pfennigs against the D-mark, leaving the DM3 level well behind. Overseas earners such as British Steel suffered accordingly.

There was one hopeful sign for the beleaguered manufacturing sector. According to Mr Bijal Shah, global strategist at Merrill Lynch, directors have been piling into the shares of the companies they own, particularly industrial stocks. That is normally a bullish indicator.

The FTSE Mid-250 index also fell on the day, dropping 3.6 to 4,488.4 but for once the SmallCap index outperformed, gaining 0.3 to 2,188.7.