Neither a multibillion-pound bid nor some distinctly anti-inflationary figures could put a smile on the London market yesterday. On what should have been an upbeat day, the FTSE 100 index fell back while the smaller stocks merely held steady.

The bid for Asda by Wal-Mart of the US was a complete surprise, particularly as the American company had said only a few weeks ago that a UK deal would be too expensive. It represents an injection of £6.7 billion (€10.4 billion) into the market and a radical shake-up for the UK stores sector. And turnover in Kingfisher, the injured party in the deal, Asda and Tesco accounted for a third of all the trading volume in London yesterday.

If the FTSE 250 supermarket chains were included as well as British Steel, which announced a deal with Hoogovens of the Netherlands last Monday, six stocks made up nearly half the day's entire turnover.

Then there were the figures. The annual rate of price increases in manufactured goods slipped to just 0.9 per cent last month, compared with annual price growth of 1 per cent during April.

And the latest producer prices data showed that while input prices were not falling as much as they have been, they were still down nearly 3 per cent on a 12-month view.