Nervousness about today's by- election in Newbury also took its toll, prompting a further sell-off of the June FT-SE 100 contract in the futures market.
Blue chips remained in negative territory through the day, although prices rose off the bottom towards the close.
The FT-SE 100 index, down 26.2 points in morning dealings, was helped later in the day by a firmer opening on Wall Street and finished 16.1 lower at 2,796.5.
Overall trading was slow, with fewer than 540 million shares changing hands. Dealings in FT-SE 100 stocks barely topped 200 million.
Institutions were reported to be keeping the lid on spending ahead of an expected run of cash calls, and the BT and Zeneca share issues.
Despite their expectations, yesterday's pounds 404m rights issue from Royal Insurance caused a big surprise, and the composite insurer's shares duly fell 9p to 307p.
All the other composites followed suit. Commercial Union dropped 13p to 574p, General Accident shed 6p to 554p, GRE lost 8p to 178p, and Sun Alliance eased 7p to 325p.
Electricity and power shares had an unsteady time after Professor Stephen Littlechild, director-general of electricity supply, called on the big generators to account for their role in the recent rise in 'pool' prices.
He said: 'I have asked National Power and PowerGen to explain their part in the recent pool price movements. I also look to them to give a public explanation and justification of their bidding behaviour.'
PowerGen closed 4p off at 324p, National Power eased 2p to 321p, Scottish Hydro-Electric gave up 3p to 323p, and Scottish Power dropped 4p to 303p.
Elsewhere, Redland rose 18p to 468p after a buy recommendation by Kleinwort Benson.
Kleinwort has upgraded its profit forecast for this year from pounds 225m to pounds 256m, and from pounds 270m to pounds 310m for 1994.
Other gainers among building material groups included Spring Ram, up 1p to 87p after Lazard Freres Asset Management announced it had built up a 5.46 per cent stake.
In oils, Shell improved 6p to 562p. The company is said to be planning to bring forward several new projects in the North Sea because of the Budget changes on petroleum revenue tax.
Lasmo held steady at 152p despite Robert Fleming cutting its stake from nearly 5 per cent to less than 4 per cent. Chase Manhattan Bank has also reduced its exposure from almost 4.5 per cent to 4 per cent.
BP firmed 2p to 296p ahead of today's first-quarter figures. UBS expects net income to advance from pounds 95m to pounds 200m.
Brewers came under pressure ahead of their reporting season. Allied-Lyons fell 11p to 562p, Bass eased 3p to 531p, and Scottish & Newcastle slipped 4p to 461p.
HP Bulmer retreated further on the loss of the Perrier distribution contract, closing 8p off at 396p. JD Wetherspoon, meanwhile, hit another high, rising 5p to 281p.
A profit warning hammered Geest, which dropped 106p at one time before regaining some ground to close 68p down at 366p.
Elbief eased 1p to 27p, following the resignation of David Lawrence as finance director after just one year.
CMW Group, suspended last Friday at 12p, has gone into receivership.
The FT-SE 100 share index fell below 2,800 yesterday, losing 18.1 points to 2,796.5. Second-line stocks also fell, resulting in a 14.4-point drop to 3,119.1 in the FT-SE 250. Gilts, however, held on to early gains of about an eighth of a point. Account ends 7 May, and settlement is on 17 May.
There was further heavy trading in Cannon Street Investments, the mini-conglomerate that recently announced losses of pounds 115m. More than 1.3 million were dealt. There was talk that Tom Long, chairman, had started to invest personally in the company, buying 40,000 shares. One broker is said to be forecasting profits this year of pounds 4m. The shares, soft in early dealings, closed unchanged at 16.5p.
Trading in Bruntcliffe Aggregates, a sand and gravel quarrying company, started yesterday with the shares jumping to a 20 per cent premium at 29p. Bruntcliffe raised pounds 4m from its placing and at the same time bought two quarries, one in Rugby and one in Pittsburgh, USA. The 25p placing price equated to Bruntcliffe's net asset value. It wants to make more acquisitions funded by placings.
The long-depressed share price of the 535-listed Pan Andean company has started to move, rising from 5p to 7.5p. There is speculation that the company, which is mainly involved in oil, is looking for joint venture partners for its mothballed gold interests in Bolivia. The mines are said to have become economically viable once again because of the rise in the gold price.Reuse content