Any hopes that the three-day rally in equities which saw the FTSE 100 recoup well over 400 points would run on into a fourth session were dashed by news of more confidence sapping profit warnings from across the Atlantic.
The latest warnings, from Nortel, the Canadian telecoms equipment manufacturer, and Palm, the handheld computer group, were announced after Wall Street closed for the day and, predictably, drained European markets of their recently-regained vigour.
London, with other European markets, came under instant downside pressure at the opening with dealers only too aware of the potential impact of the Nortel/Palm news on Wall Street. London dealers' worst expectations about Wall Street's reaction to the Nortel/ Palm news were proved absolutely correct with the Dow chased downwards and posting a 200-points plus decline.
Weakened by the pressure from across the Atlantic and elsewhere, the FTSE 100 gave back much of Tuesday's strong gains, eventually closing a net 114.1 lower at 5,614.0, having been down 135.9 at its worst of the session when it dropped below 5,600 to touch 5,592.2.
It was the same story for the Techmark 100, which having recrossed the 2,00 mark on Tuesday, turned back to hit a session low point of 1,965.17 prior to close the day a net 53.98 off at 1,980.16.
While the pressure was plainly on the TMT areas of the market many of the "old economy" areas of the market were enjoying good support from investors.
And the FTSE 250 managed to resist the periodic selling pressure circulating in the market, eventually closing 1.9 higher on balance at 6,053.9, helped by a handful of warmly-received company reports, especially from House of Fraser.
The FTSE SmallCap was in positive territory throughout the morning but fell away during the afternoon to settle 9.9 off at 2,889.1.
The Nortel and Palm news cut lumps from the stock prices of many of the UK market's leading tech stocks. Marconi, which has sustained hefty losses in recent months as the TMT bubble has deflated, plunged another 9 per cent, to its lowest level since mid1998.
Sentiment in the smallcaps was given a jolt by another burst of profit warnings from stocks such as Kleeneze, Claims Direct and Teather & Greenwood.
