The pound's discomfort was almost the final straw in a lacklustre session.
The market's first disappointment was the German decision not to cut interest rates; then New York, flustered by poor employment figures, fell back, and County NatWest said it had cut its market-making book.
Still, shares held their own until it became apparent the pound was yet again under intense pressure. The atmosphere then changed. Within minutes a modest gain was eliminated and, briefly, the market went into free-fall before steadying.
There is no doubt that at least some investors, thought to be overseas, suddenly panicked and dumped stock on the market. With end-account considerations looming large there was no great desire to soak up the shares on offer.
Until the afternoon slump the market had enjoyed one of its more fascinating pastimes; endeavouring to spot the next bid victim.
The Hongkong Land dawn raid on Trafalgar House and subsequent tender offer reawakened speculative instincts and Ranks Hovis McDougall, the food group, was targeted as the next takeover candidate.
At one time the shares were up 9p to 177p as a continental group was rumoured to be interested. Talk of a flour price increase also helped. The shares closed 7p higher.
Fisons also had a speculative run, ending 7p up at 196p. The drugs group has been the subject of intense takeover gossip, with Astra of Sweden still the favourite to strike.
Trafalgar, meanwhile, was actively traded, with the shares slipping 4p to 85.5p.
BET, the business services group, attracted yet another downgrading - this time from Societe Generale Strauss Turnbull. The shares gave up 7p to 95p.
Hanson remained weak as more profit revisions appeared. County has acutally increased its estimate for the year just ended from pounds l04bn to pounds 1.08bn. But the current year's forecast has been dropped from pounds 1.23bn to pounds 1.15bn with, because of higher tax charges, earnings per share sharply lower at 17.9p. The shares fell 2p to 207.5p.
Scottish & Newcastle was flat. An analysts' visit to its French holiday centres has failed to provide any inspiration and the shares lost 18p to 412p.
Grand Metropolitan, Allied- Lyons and Guinness weakened on worries about US import restrictions. Allied fell 17p to 588p; Grand Met, already suffering from the pinch of profit downgrades, 18p to 384p and Guinness 16p to 521p.
Eurotunnel lost 15p to 420p as profit-takers moved in, and worries about British Airways' proposed USAir deal clipped the shares 6p to 289p. NFC lost 17p to 252p following an pounds 80m convertible bonds issue. Euro Disney was hit by a flurry of French selling, down 68p at 820.
Racal Electronics, as the Chubb demerger was approved, fell 1.75p to 64.25p. Racal special-ex were 129p and Chubb when-issued 202p.
TI Group, up 16p to 298p, continued to strengthen on relief its Dowty Group provisions were lower than many estimates.
Storehouse rose 6p to 148p as a number of investment houses upgraded their estimates, and Next continued to gain support, up 5p at 105p.
Hazlewood Foods, which has edged ahead lately, closed a further 1p higher at 122p. The stockbroker Harris Allday Lea & Brooks is looking for profits to grow from pounds 51.2m to pounds 56m.
Gibbs Mew, the family-controlled Salisbury brewer, fell 5p to 183p as Brierley Investments turned on the bid pressure. Its 200p a share offer will, it says, lapse if Gibbs shareholders approve the takeover of the drink wholesaler UKD on Friday.
The pubs group Harmony Leisure edged ahead 0.5p to 6.5p. Rebel shareholders say they have received sufficient support to call a shareholders' meeting at which they will seek to gain board control.
Hoskins Brewery, up 1p to 46p, also faces a revolt. Richard Cattermole, a shareholder seeking election to the board, has called for a special meeting to be convened. He wants Barrie Hoar removed as chairman.
Ramco Oil jumped 15p to 51p on its deal to develop a field in the South Caspian Sea and Proteus, the computer design drugs group, surged 37p to 385p. It announced a research agreement with a US group. The shares have climbed 64p in three days.
The account ended on a dismal note with the FT-SE index down 22.6 points at 2,549.7. At one time it was off 27.4. The FT 30-share index weakened 20.8 to 1,854.3. Turnover was 599.8 million with 26,423 bargains. Government stocks fell on rumours that Moody's was to downgrade Britain's credit rating.
Burton Group, the hard-pressed retailer, had the distinction of attracting a profit upgrading yesterday. Tony Cooper, analyst at the stockbroker Carr Kitcat & Aitken, lifted his estimate for the year to next August from pounds 20m to pounds 35m. In happier days Burton achieved profits comfortably exceeding pounds 200m. The shares, once more than 300p, edged ahead 2p to 41.5p.
Shares of the tool maker B Elliott were suspended at 3p yesterday as restructuring talks took place. The company said negotiations were well advanced but 'the hiatus in currency and stock markets' had caused some delay. Elliott made profits of pounds 6.5m in the year to March 1991 but then went into losses. Figures for last year are still awaited.
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