With the Chancellor's speech to the Confederation of British Industry providing few clues on the Budget, many institutional investors stayed on the sidelines.
Goldman Sachs, the US securities house, provided some excitement with a pounds 300m overnight programme trade involving an arbitrage between the futures and cash markets. But the deal's impact on share prices was broadly neutral.
Traders said many investors were awaiting the outcome of several key economic issues. October inflation figures are due on Wednesday and could have an important bearing on the Budget.
Institutions are also increasingly worried that the Government may be planning further limits on tax breaks for pension funds.
There was also uncertainty about the prospects for the proposed Nafta trading bloc covering the US, Canada and Mexico. The US Congress votes on the plan later this week.
As a result trading volumes were moderate, totalling 493 million shares. Although the FT-SE 100 index opened in positive territory it failed to hold above the 3,100 mark, closing 5.8 down at 3,093.3.
Leisure stocks, however, saw busy trading. Ladbroke, the betting shops and do-it- yourself stores group, slipped 5p to 163p as the market continued to fret about its dividend prospects and a possible rights issue.
There was talk that some investors were switching out of Ladbroke and into Forte, the hotels and motorway service stations operator. Trading in Ladbroke was high, with more than 5 million shares changing hands.
But Forte rose 4p to 231p. The company is taking a group of institutional investors on a visit to several British sites before whisking off City analysts on a similar trip to France on Friday.
Bargain-hunters in Paris pushed Euro Disney up 15p to 385p. Last week the theme park operator reported a pounds 600m loss and admitted it needed a cash injection. A week ago the shares were trading above 500p.
Cautious trading statements from British Steel and British Airways took the shine off both groups' first- half results, reported yesterday. The steel maker returned to the black with pre- tax profits of pounds 27m, but warned that European demand remained depressed. The shares eased 2.5p to 122p.
Although British Airways confirmed its status as the world's most profitable airline, with an pounds 8m jump in interim profits to pounds 235m, the shares dropped 2p to 397p.
However, BAA, the airports operator, gained 5p to 901p on hopes of strong first- half figures due today. The market is expecting taxable profits to improve from pounds 220m to pounds 240m and the dividend from 6.25p to about 7p.
The decision by Philip Morris, the US group, to raise cigarette prices led to a 4p advance to 516p at BAT Industries, the insurance to tobacco conglomerate.
Yorkshire Tyne-Tees, the ailing regional broadcaster, raced ahead 13p to 218p on rumours that LWT (Holdings) was planning to acquire a 15 per cent stake from Pearson, the publishing group, through an asset swap.
The move would boost LWT's total shareholding in Yorkshire to 28 per cent, putting it in a powerful position to launch a full takeover bid if the Government relaxes ownership rules covering regional broadcasters.
LWT shares shaded 9p to 499p while Pearson edged ahead a penny to 583p.
Glaxo fell 12p to 642p after it admitted sacking five staff for using sales techniques banned by the industry's code of practice.
Fisons, which last week suspended an employee for alleged questionable sales practices, was 0.5p up to 144p. Buyers from America lifted Zeneca 11p to 765p.
A weak crude oil price pushed Enterprise Oil 7p lower to 445p, though Lasmo, the troubled oil independent, improved 1.5p to 130p as US investors nibbled at the stock. Clyde was unchanged at 44p despite an encouraging drilling report.
British Petroleum lost 6p to 351p as the shares went ex- dividend. But Shell rallied 2p to 692p. A dull third-quarter result from the company led to a bout of selling last week, but British institutions continue to favour the stock.
Tadpole Technology, the computer workstations maker, slumped 10p to 279p as a downbeat trading statement disappointed its fans. There is speculation about board changes.
Lack of investor interest at Division Group, the virtual reality company, led to a 5p dip to 86p. But Enterprise Computers extended recent gains with a 1p rise to 33p.
The FT-SE 100 index fell 5.8 points to 3,093.3, while the FT-SE 350 shaded 2.7 to 1,539.6. Turnover was 493 million in 28,523 deals. A new account began yesterday, ending 25 November. Settlement is on 6 December.
Investor sentiment appears to be warming to Lloyds Chemists, the retailer. Last week a group of institutions were taken on a company visit and it has followed up the event with presentations in the City. The company's taxable profits are expected to rise from pounds 50m to pounds 55m this year. The shares jumped 12p to 286p.
Building stocks with a high exposure to the US economy could be poised for an advance, according to NatWest Securities. The firm is recommending Blue Circle, Marley and Wolseley on the grounds that the US industry is accelerating out of recession. But shares in the trio were unchanged yesterday.Reuse content