A muted performance on Wall Street during late afternoon, after a warning from the White House that Far Eastern turbulence would affect the economy in the States, did not help matters. Footsie drew to a mediocre close, up 27.7 at 4891.2, though volume was higher than in previous days, with 830 million shares traded.
Oil companies saw a lot of the action after Goldman Sachs slashed its 1998 crude oil price forecasts. BP was the biggest Footsie faller, down 38.5p to 808p. Lasmo dropped 5.25p to 268.75p and Shell shed 2p to 418p, with 16 million shares traded.
Although Goldman's forecasts had been at the top end of the range, news later in the day that Deutsche Morgan Grenfell had also turned bearish added to the oil sector's woes. DMG downgraded its 1998 profit forecasts for Shell. Yesterday's losses were, however, written off by some observers as little more than a correction, given that the oil companies have had something of a bull run this year.
The insurance sector was in demand yesterday. Market-makers got out the blue pens after expectations that Generali may raise its bid for AGF, the French insurance group. Royal & Sun Alliance added 18p to 541p, and Commercial Union leapt 21p to 818p.
Meanwhile, London & Manchester Group, the life assurance company, soared 26p to 514p on bid speculation. Although several analysts said it was unlikely there would be any big acquisitions in the sector in the short term, dealers clearly thought otherwise.
Redland improved by 4.5p to 339.5p after accepting an improved pounds 1.8bn offer from Lafarge. The move did wonders for the building material sector. Blue Circle led the Footsie climbers, up 13.5p to 357.5p, and Aggregate Industries was among the best second division performers, up 3p to 50p. A feeling that Hanson would be the next building company to fall sent its shares up 9.5p to 301.5p.
Ionica Group, the telecoms company which issued depressing interim results last week, once again led the rogues gallery of second-line fallers. It shed another 6p to 115p. The group has now lost nearly three-quarters of its value since its flotation in July.
EMI also continued to decline, down another 13p to 457p, after disappointment with first-half results on Tuesday. By contrast, Boosey & Hawkes, the music publisher, which EMI is said to be interested in buying, closed richer to the tune of 70p at 800p.
A rather larger publisher, Reed Elsevier, put on a spurt, adding 13.5p to 624.5p, despite press reports in Amsterdam that lawyers and tax specialists have complained to the European Commission about Reed's merger with Wolters Kluwer.
Still with the media sector, BSkyB's shares recovered some of the losses sustained over the last five months.The Independent reported yesterday that it would refocus its marketing strategy following the departure of Jim Hytner, marketing director. BSkyB jumped 13.5p to 441.5p, and was helped along the way by a round of visits to institutional shareholders from Mark Booth, the new chief executive.
Far Eastern influenced stocks continued to rally yesterday, following the Nikkei's 178 point gain overnight. Standard Chartered bounced 21p to 697p, and HSBC improved 31p to pounds 15.18.
British Biotech added 7p to 110p after positive noises from Lehman Brothers. The company issued interim results on Tuesday.
Advanced Technology, the Ofex traded minnow, ended a penny better off at 25.5p after launching a new pager service.
But market-makers called time on Grand Metropolitan and Guinness, despite the fact that shareholders gave their official approval to a merger of the two companies. GrandMet weakened 11p to 557p, and Guinness eased 5p to 556p.
Monarch Resources, the gold mining company, was a third-line casualty. It fell nearly 30 per cent from 6.5p to 16p on news it is to cancel its UK listing.