It was the story that tax relief the institutions enjoy on their dividend payments would be abolished which caused the greatest concern. Suggestions the windfall tax will skim pounds 500m from Railtrack and the National Audit Office was set to discover a black hole in the Government's inherited finances contributed to the sudden erosion of sentiment.
It was very much a market- makers' induced reaction. There was no evidence of heavy selling. Turnover was below average once the near 150 million volume recorded by debutante Norwich Union was stripped out.
At one time Footsie was down 47.6. A mixed New York display and a little late bargain hunting prompted the modest rally.
Said one trader: "It's a pretty miserable day - it's Monday, it's raining and there is no enthusiasm around."
Norwich peaked at 357.5p. It closed at 324.5p, an effective 34.5p gain.
National Westminster Bank, however, usurped Norwich as the financial event of the day. It fell 41.5p to 755p as Martin Owen, chief executive of the bank's City operation, NatWest Markets, quit. Even excluding the pounds 77m one-off hit for interest options mispricing the securities side expects profits to be significantly lower.
The problems at the investment arm prompted NatWest to warn six months' profits would not top pounds 770m, against hopes of up to pounds 900m.
The NatWest setback undermined confidence among the hitherto high-flying banking contingent with Abbey National, the bidder for former discount house Cater Allen, off 27.5p to 868p and Barclays down 36.5p to 1,212.5p.
British Energy also had a sudden departure to contend with - chief executive Robert Hawley. The shares fell 13p to 145.5p although a 9.1p final dividend was stripped from the price.
A few out-of-favour stocks picked a downbeat day to stage modest revivals. Burton and Smith & Nephew, both to be ejected from Footsie, led the leader board and even BTR put on 2.5p to 191.5p.
Shell remained in demand, up 18.5p to 1,277.5p, and RioTinto scored again on the strength of the copper price, up 11.5p to 1,109p.
Utilities had an uncertain time on the looming windfall tax. Railtrack was shunted backwards 30.5p to 624p and Severn Trent lowered 29.5p to 740p.
Psion, the computer group, also produced a profits warning, falling 97.5p to 407.5p. On Friday Logica had a similar experience and lost 95.5p. It declined a further 32.5p to 722.5p.
London Bridge Software put on 12p to 332.5p. The group, specialising in credit management systems, came to market at 200p in March. It said it was hoping to clinch an acquisition which would require a rights issue.
Bluebird Toys fell a further 8.5p to 80p, lowest for three years. A surprise profits warning last month has caused the latest decline. Yet Bluebird looks a sitting duck for takeover action with its pounds 26.3m cash pile almost matching its market capitalisation.
Cable & Wireless Communications firmed to 290p as Salomon Brothers produced a 422p target price, suggesting merger benefits of pounds 200m a year by next year.
Albert Fisher, the food group where a predator hovers, fell 3p to 43.5p with Barclays Global Investors selling 1 million shares at 45p. It now has 2.62 per cent.
T&N, the vehicle components group, was at one time up 28p on takeover speculation. The price closed at 159p, up 21p. Reports of pounds 1bn joint bid from US groups Dana and Federal Mogul created the excitement.
Bakychik, seeking gold in the former Soviet Union, dropped 9.5p to 83.5p, a low. Last year the shares touched 589.5p. In February the gold struggler raised pounds 7.1m through a placing at 200p. It is known to need more cash to bring its mines into production.
Norwich was not the only newcomer.
On Ofex little Internet Music Shop was launched at 50p. Its offer was 3.5 times oversubscribed. The shares closed at 55p.
Fairbriar, the house builder, rose 5p to 37p after producing profits of pounds 3.3m against a pounds 545,000 loss. The company, where the Bank of Scotland sits on 47.3 per cent, was rescued from the corporate graveyard five years ago.
Dean Corporation added 1.5p to 14.5p after announcing orders totalling pounds 7.2m.
The controversial management takeover of Colleagues, the junk mail specialist, is thought to be near to being announced. The shares have edged ahead to 70p as the deal's finishing touches are put together.
Many in the City think chairman James Robson and his team should pay at least 115p a share - the price at which the company was floated at two years ago.
The shares have been as high as 265p but came crashing down following trading problems. A US fund is thought to be supporting the Robson deal.
Waste Recycling, the David Williams vehicle which came to market at 50p three years ago, shaded to 297.5p, just below its peak.
There is talk it will soon attract a bid, possibly from a water company.Reuse content