Any lingering hopes that a half-decent market debut by Orange, the mobile phones group floated by France Telecom on the London and Paris stock markets, would provide a boost to the two bourses were severely dashed yesterday.
Priced at the very bottom of the range, €10 (635p) for institutional investors and €9.50 for retail investors, and set for a 1 p.m. kick off in London, the signs for the shares were ominous during the morning trading session when the stock dipped below the institutional offer price in "grey" market dealings.
The shares began trading at 632p and drifted back throughout the afternoon, dragging down the demoralised UK telecoms sector at the same time.
BT's proposed flotation of BT Wireless, which includes the Cellnet mobile phones business, now looks to be even more difficult to get away, which will do no good to the recently sliding BT share price. While the Orange news produced widespread dismay, there was plenty more economic and corporate news items keeping the market pot boiling.
On the economic front, there was excellent news on domestic inflation, with the January data showing core UK inflation down to 1.8 per cent, year-on-year, the lowest figure since records began in 1976, compared with the government's 2.5 per cent target.
The headline inflation figure also fell sharply, to 2.7 per cent. That news was welcomed in the market but failed to produce any upside reaction in a stock market preoccupied by the Orange news.
Later, most market operators were glued to TV screens and wire services as Alan Greenspan, chairman of the US Federal Reserve, delivered his twice-yearly testimony on the US economy to the Senate banking committee. While his comments could hardly be interpreted as bullish he said "the downside risks predominate" they were being interpreted as indicating that there were more interest rate reductions to come. And the Dow Jones Industrial Average, still celebrating the 165 points gain registered on Monday evening, pushed up a further 50 points.
The Nasdaq Composite was also in good form, adding 42 points at the same time.
At the close the FTSE 100 index was 12.9 lower, having looked likely to drop below the 6,200 at one point, while the FTSE 250 managed a 5.9 gain at 6,775.0 and the SmallCap eased 3.7 to 3,306.9. The Techmark 100 fell 5.73 to 2,626.67.
The Merrill Lynch February survey of UK fund managers said that fund managers expected UK base rates to be 5.4 per cent in 12 months' time and viewed monetary easing as positive for the market. Bulls of the market outnumber bears by the highest margin since July 1995, the survey said.
