The latest decline shaved 55 points from the index, leaving it at 5,779.9 - its lowest since just before Christmas. Only last week it was riding above 6,000.
The sudden retreat has occurred against a background of heavy trading with share turnover often topping 1 billion.
New York, lower during London hours, has helped undermine confidence, as has a nagging fear that last week's surprise half-a-point base rate cut indicated a degree of panic at the Monetary Policy Committee meeting and the nation's economic prospects were, therefore, rather worse than some experts anticipated.
Many of the hitherto high flyers have suffered in the February fall. Colt Telecom lost a further 36.5p to 1,037p, against 1,341.5p earlier this year, and Orange fell 34p to 817p.
The newly-created engineering group BTR Siebe led yesterday's Footsie retreat, losing 15.75p to 228.5p.
Once again there was bubbling activity in the oil sector. BG, with Salomon Smith Barney advocating a 415p fair value, fell 6p to 356p with stories continuing to flow that it was one of the predators circling Lasmo, off 2.5p to 116p. ENI of Italy and Repsol of Spain are the other names in the frame. Enterprise Oil, talking merger with Lasmo, rose 4p to 238.5p.
Securicor, at one time up 22p, closed 7.5p higher at 588.5p. Goldman Sachs adopted an upbeat stance with a 685p target price. But Henderson Crosthwaite was more cautious, suggesting a target range of 570p to 620p.
Henderson's Chris Godsmark believes BT will buy Securicor's 40 per cent Cellnet stake this year but suggests the telecom giant will not pay some of the fancy prices bandied around. He puts forward pounds 2.8bn.
BT was off 27p at 908p with its free Internet service failing to log on investors. It also had to contend with CSFB reducing its share target to 1,075p from 1,150p and a Lehman Brothers' suggestion that tomorrow's third-quarter figures will produce "creeping downgrades".
The major mining groups made further progress as the stock market swung round to the view they were over-sold and perhaps the metals tide had turned.
RioTinto, at one time up 25p, settled for a 9p gain at 799p. Billiton, the South African Footsie constituent, firmed 4.5p to 130.5p after Paribas suggested a long-term valuation of 200p. It said: "There is substantially greater upside than RioTinto."
Lonrho jumped 35p to 390p, helped by talk of corporate action, and Reunion Mining rose 23.5p to 75.5p after reporting that it was examining various options about financing its Namibia zinc project.
Mid cap shares again failed to build on their recent progress with the index off 27.9 at 5,177.5. Still, the small cap index remained firm, up 4.9 to 2,220.
Takeover interest among the tiddlers was probably responsible. Stories swirled of corporate action at David S Smith, the packaging group, prompting a 9p gain to 124p in busy trading.
And Booker, the hard-pressed cash-and-carry chain that former Argos man Stuart Rose is trying to revitalise, improved 9.5p to 66p on stories of an imminent strike.
Last year Budgens and Somerfield looked at the struggling group but did not like what they found and walked away. Now, one story is that Tesco could be interested. Another name in the frame is Wal-Mart, the huge US retailer which has let it be known it intends to expand into Europe. There is also talk of a German strike.
Media group Primesight rose 31p to 316p as Scottish Media emerged with a 320p cash offer. Oil services group Abbot rose 31p to 176p after its merger talks with ProSafe, a Norwegian group, collapsed. A deal would have created a pounds 500m oil services group. There have been market rumours that the two sides were having difficulty stitching together a deal and Abbot's shares have been volatile.
Pycraft & Arnold, the loss adjuster, slipped 3p to 65.5p as financial services group Fishers International declared itself the possible bidder. Tetra, a computer group, was little changed at 277.5p after Lynx, off 6p at 209p, said it had made the approach.
Servisair, the aircraft support group, rose 4p to 218.5p. It continues to reject the 200p offer from Amey, the construction group. Indeed, it said director Stephen Walls, ex-Plessey, was attempting to mastermind a counter offer.
Crown Eyeglass, up 15p to 92.5p, admitted a management buy out was under consideration.
Tobacco shares were the day's best performers, lit up by the High Court success of Gallaher and Imperial Tobacco. Gallaher, off on Monday on the loss of its Royal Warrant, was puffed 16.5p higher at 431p. Imps rose 24p to 711.5p and British American Tobacco 17.5p to 631p.
Marks & Spencer was little changed at 362.5p. BT Alex.Brown remains cautious. It points out that the latest accountancy changes covering the measurement of tangible assets could knock up to pounds 50m from the retailer's reported profits. With the high street chain engaged in what seems to be a slow recovery, the investment house expects a dividend cut next year and suggests the shares could retest its 333.5p low.
MFI, the furniture chain, added 4p to 43p with CSFB suggesting a switch out of Carpetright, little changed at 291.5p. SG Securities' comments helped Harveys Furnishing to achieve a 7p gain to 118.5p.
Utilities remained in demand with investors encouraged by their high dividend yields and general safe haven appearance. Thames Water rose 14p to 1,113p and United Utilities 13.5p to 803p. National Power firmed 8p to 500p and Scottish & Southern, helped by Charterhouse Tilney support, 7.5p to 615p.
Lower interest rates may not be causing universal jubilation but builders are celebrating. Beazer, up 12p to 179.5p, and Barratt Developments, 13p to 258p, led the way. Long depressed properties also firmed on interest rate considerations. MEPC rose 11.25p to 441.25p and British Land 23.5p to 503.5p.
SEAQ VOLUME: 1.06bn
SEAQ TRADES: 71,010
GILT INDEX: 115.56 +0.13
SHARES OF money and securities broker Trio Holdings rose 0.5p to 7.25p, its highest since 1996.
After three years of losses, totalling pounds 33m, the company recorded a pounds 2.2m profit last year which included a pounds 1.1m VAT repayment.
Capitalised at only pounds 6m Trio has nearly pounds 4m cash and is clearing the way to make dividend payments. Six years ago, when profits of around pounds 5m were achieved, the shares touched 63p.
SAVE, the hard-pressed independent petrol retailer, formerly called Frost Group, was pumped up 6p to 45p in busy trading as stories swirled that the Kuwaiti-owned garage chain, Q8, planned a takeover offer.
The shares, brushed by bid talk in the past, have come under increasing pressure as competition from the major oil groups hit profits.
Four years ago they touched 269.5p and even last summer traded at 136.5p.Reuse content