Investors sit on a cash pile and watch the world go by

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For a time shares were stretching to new peaks, seemingly intent on making another strong bound towards the magical 4,000 points mark.

But many investors remained unimpressed. Buying support was insufficient to keep up the momentum and with New York offering no encouragement the FT-SE 100 index surrendered an impressive 22.8-point advance to end just 5.3 up at 3,916.1 by the close.

The reluctance of investors, big and small, to take decisive action is puzzling many seasoned professionals. There should be a huge amount of cash slushing around the system. This year's institutional inflow should be a record pounds 55bn and the rush of share buy-backs has given many leading investors - although private shareholders have largely missed out - unexpected cash to reinvest.

Yet, although interest rates are unexciting, fund managers seem content to nurse their cash piles. There is a theory they fear the expected turbulence normally associated with the run-up to an election and many are planning to pump much of their surplus cash overseas.

Even so the stock market offers better fundamental value than most overseas markets where, of course, foreign exchange movements are an additional hazard. Prospects for the UK economy, many observers believe, are encouraging. Says Simon Briscoe at Nikko, the Japanese securities house: "Despite the inflation, consumer boom and policy scares, the UK economy continues to grow at a steady and modest rate. The clouds on the horizon are less threatening for the UK than for most other countries."

Turnover yesterday was a shade ahead of recent offerings. There was a large number of small trades, partly reflecting repositioning by private shareholders ahead of tomorrow's final instalments on the second National Power and PowerGen share sale.

P&O's container merger added another 23p to the shares at 583.5p and Danka Business Systems continued to score from its Kodak deal, up 30p at 590p.

For Thorn, the rental group, it was another sad session, which can only increase its chance of falling out of Footsie. The market is worried about what appears to be tougher consumer credit moves in parts of the US. The shares, which have been as high as 394p since last month's demerger from the EMI showbiz group, fell 14p to 369p.

Thorn's discomfort, however, was nothing compared with the suffering at Matthew Clark, the cider group. A surprise statement that profits would be hit by the alco-pop boom, crushed the shares 239p to 431p as analysts scrambled to lower forecasts for what had been regarded as a high-flying group. HP Bulmer, the biggest cider maker, fell 28.5p to 552.5p but Merrydown, which could claim to have bitten Matthew Clark with its Two Dogs alco- pop, was little changed at 117p.

Allied Domecq fell 7.5p to 461p as long-term bears Lehman Brothers repeated sell advice. Grand Metropolitan, however, put on 7p to 491p, highest for more than a year, on growing expectations of further asset sales.

Unilever, the Anglo-Dutch giant, was 6.5p firmer at 1,346.5p ahead of an investment presentation in Boston arranged by US house Prudential Bache. Cable & Wireless gained 8p to 433p in advance of new chief executive Richard Brown's first meeting with analysts. Vodafone, another on the analytical trek, firmed to 233.5p.

Zeneca, as its migraine deal with Glaxo Wellcome moved a little nearer completion, tumbled 26p to 1,530p. In an uncertain drugs sector Scotia fell 42p to 691.5p despite an upbeat statement. But ML Laboratories, which has suffered a long tortuous decline coming down from 468.75p, rebounded 18.5p to 325.5p on a little bottom fishing.

Railtrack steamed into the inevitable profit taking, off 3.5p at 277p, but British Energy, regarded as the privatisation too far, showed signs of awakening with the shares up 3p to 102.75p, as Barclays de Zoete Wedd offered support. The sale price was 100p.

Sears, the hard-pressed retailer, was busily traded with a 3.4 million trade at 94p creating interest. The price fell 1p to 92.5p.

Surrey Free Inns, the pubs chain where takeover action is expected, frothed 9p higher to a 320p peak. Signals that its banks may place most of their shares lowered European Leisure, the once struggling discotheque group, 26p to 176.5p. A cash-raising exercise also appears likely. Graham, the builders merchant, lost 16p to 137p.