A cut too far for Footsie as panic erupts in New York
After clamouring for lower rates, the market greeted the eventual reduction with a 47.9 points fall to 3,710.3; at one time it was down 72.
It was, however, the American interest rate scene which provoked the slide.
Shares were drifting, doing very little, with lower rates already discounted. Then US pay-roll figures produced panic; they appeared to dash hopes of a US rate cut.
New York crashed with the Dow Jones Average down 114.5 in early trading.
London, which in the main has chosen to ignore the Dow's record breaking exploits, was caught cold on a dull Friday afternoon and with market makers ducking and diving prices slumped. Yet a trader at one leading house was heard complaining he had not received a single selling order.
Behind the fall was the fear the long-awaited cut could, ironically, turn out to be a cut too far.
The market had expected other nations to follow the UK but if US rates are frozen they are unlikely to do so.
At best, it appeared that after three cuts in three months any further reduction would not occur for some time.
At the close only three blue chips mustered gains; GKN, on its results, 16p to 893p; SmithKline Beecham 4p to 721p and RTZ, 1p to 922p.
Glaxo Wellcome, the drugs giant which needs another acquisition, experienced unusually heavy trading with, it appeared, some investors keen to switch into other drug shares. At one time Zeneca was up 31p but ended 7p lower at 1,370p.
Reed International's decision to defer the sale of its consumer books division because it had not received acceptable offers, lowered the shares 28p to 1,035p.
Takeover speculation was overwhelmed by the retreat. GRE, the insurance group, seemed to be on the verge of being the Friday afternoon ramp but ended 10p lower at 239p. But Allders, the department store group with extensive duty free interests, held a 12p gain to 202p as talk of a break- up bid, with LVMH taking the duty free operation, resurfaced.
Nynex held at a 1p gain to 105p as talks with TeleWest, down 1.5p at 141p, were confirmed.
Siebe, the engineer, was at one time 19p higher, reflecting an investment presentation. The shares ended 4p off at 833p. Barclays, the banking group, lost 19p to 733p on talk of a cautious presentation at its securities arm, Barclays de Zoete Wedd.
South West Water rose 8p to 616p and potential bidder Wessex Water recovered 3p to 327p.
Amey, the roadbuilder, surged 51p to 168p following the acquisition of a British Rail maintenance company for pounds 15m. The deal prompted Steven Williams at stockbroker Williams de Broe to lift this year's profit forecast by more than pounds 4m to pounds 10.75m.
The shares were floated at 161p two years ago.
Costain, the builder, was one to cling to a gain, 10p to 91p. The rate cut and bid hopes prompted the progress.
Some television shares, sharply lower in early trading as it became clear payments from Channel 4 would be reduced, closed above their worst.
Scottish Television, at 638p, halved its fall to 20p; Carlton, at one time down 12p, finished at 428p, off 2p. But others refused to rally.
Allied Radio held at 3.75p as Independent Radio bid 3.3p a share, pricing the struggling group at pounds 4.5m.
The bidder has the support of shareholders with 12.98 per cent and was thought to have picked up shares in the market.
Severfield-Reeve, the fabrications group, duly produced the rumoured takeovers, two private companies. It is also raising pounds 6.6m, placing shares at 180p; they gained 10p to 208p.
Dailywin, a Hong Kong watch maker, lost 33p to 117p after warning profits would be little different from the pounds 27.3m achieved last year.
London Fiduciary Trust, with gold interests in the Philippines, held at 2.75p. T Hoare, the stockbroker, described the shares as "a cheap way to own a part of the Pacific rim of fire gold rush" now underway.
Hoare is involved in a private placing to raise $14m for LFT at 2p a share.
Gold production, it says, should be boosted to 40,000 oz this year, going to 100,000 oz in l997/98.
rInspirations, the holidays group, continues to attract takeover talk. After hitting 95p last month the shares have edged ahead on suggestions an overseas group is planning to buy a stake or even mount a full bid. They firmed to 106p yesterday.
rThe Canadians have discovered AIM. Probe Exploration, an oil explorer and producer with a quote on the Alberta Stock Exchange, is hoping to arrive in a few months. It expects to make profits of pounds 175,000 this year. Assets are 100p a share; its Alberta capitalisation is pounds 7m.
rPart of the excitement which lifted ViewInn from 100p to 300p could stem from suggestions it has fixed up a deal for its computerised data service with the up-market Meridien hotel chain, now part of Granada.
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