The FT-SE 100 index crumbled 30.9 points to 2,940.2, crashing through another of the alleged support levels, 2,950. With New York at times showing signs of panic, the stock market could be in for a further significant retreat today. Many now see 2,850 as the next support barrier. If that should fall, then the talk is of 2,500.
Much depends on bond markets which have caused the equity disaster. 'There is real value there but until the forced sellers are absorbed, long-term buyers will stand off,' one dealer said.
For much of the day Footsie gave ground grudgingly. But then it became clear shares would gather no comfort from New York. As the session wound down, US shares looked decidedly hesitant; once London closed, they slumped lower.
Although higher than Monday's woeful level, London turnover was unimpressive. Most dealers said there was little genuine investment interest with occasional scrappy selling, but once again buyers were conspicuous by their absence. The modest volume increase was attributed to programme trades.
A dramatic deterioration in US bonds, reflecting a weak US dollar, provoked the latest decline. It caused a late sell-off in Europe with government stocks lowered by about one point.
Higher inflation and interest rate worries remain to the fore. Talk of a worldwide shortage of capital adds to the nervousness.
Falls were spread throughout the list with only property, with a modest gain, and telecommunications, fractionally ahead, beating the downward blues.
Eurotunnel remained in the doldrums as the market anxiously awaited details of its rights take-up. There are fears many British investors have cold- shouldered the call and the backers will be forced to try to encourage the French to buy some of the unclaimed shares.
The rights shares, now fully paid, started at 281p and closed at 275p. The original shares went from to 283p to 276p.
BAT Industries was another under pressure. Here US influences loomed large. The powerful Food and Drug Administration said it had uncovered a project by BAT's US off-shoot, Brown & Williamson, to develop a tobacco plant containing twice the normal quantity of nicotine.
But BAT countered that the high-strength plant was not a new development.
With US authorities taking an increasingly tough line against the tobacco groups, the latest FDA assault, coming on top of growing demands for swingeing tax increases, shows that problems are mounting for US producers. BAT fell 9.5p to 391.5p.
Barclays, the banking group, also felt the US whip. The shares finished 14.5p down at 531.5p on the US court decision to support the Californian unitary tax legislation.
Unilever, the Anglo Dutch giant, encountered more soapy difficulties. The shares fell 10p to 976p after it admitted Dutch sales of its new detergent had been hit by the war of words with its arch rival, Procter & Gamble.
Trading news took its toll. Hazlewood Foods tumbled 21p to 122p on lower-than-expected profits and Silentnight, the bedding group, fell 24p to 219p on a cautious statement.
De La Rue, the security printing group that recently pulled out of a bid for Portals, went against the trend, gaining 14p to 882p as a stockbroker upgraded.
George Wimpey, on continuing hopes it had sold a share of its Little Britain City office development to Prudential Corporation for pounds 90m, went to 166p, up 5p. And Tarmac moved ahead 7p to 144p as NatWest Securities switched from sell to hold.
On the building materials pitch, BPB gained 7p to 282p on, it appeared, belated recognition of its Berlin plaster board development.
Blue Circle Industries held at 269p with SG Warburg positive.
Trafalgar House, the struggling conglomerate, added 3.5p to 88.5p as talks resumed with China over the proposed Hong Kong airport.
Thorn EMI ended 5p lower at 1,034p although the George Michael/Sony decision was favourable for the group. The Monopolies & Mergers Commission report into CDs is expected in the next few days. It is likely to recommend little-changed manufacturers' margins but hit at retailers' profits.
Leigh Industries, the pollution group, fell 4p to 203p. Two million shares were placed at 197p.
The FT-SE 100 index plunged another 30.9 points to close at 2,940.2 and the FT-SE 250 index lost 16.8 points to 3,461.9. Turnover was 544.5 million shares with 21,724 bargains. The account ends on 1 July with settlement on 11 July.
Shares of The Wensum Company, a Norwich-based men's wear and corporate clothing group, have made steady progress since diving to a 28p low towards the end of 1992. The group returned to profits last year after a pounds 44,000 loss and there are signs the revival is gathering pace. The shares were placed at 70p in 1989. They gained 2p to 62p yesterday.
Millwall, dealt suspended penalties by the Football Association following last month's hooliganism, is again rumoured to be set for corporate action. There is renewed talk the company will be used as a shell with more non- footballing assets pumped in. It has already moved into property, forging a link with Portuguese interests and it is suggested that leisure deals are planned.Reuse content