Strong mark sends shares into retreat

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The Independent Online
SHARE prices in London and New York went into full-scale retreat yesterday as the impact of the Bundesbank's increase in

interest rates took a further toll on economic recovery prospects, writes Peter Torday.

The share price fall was accompanied by a dip in the pound and the dollar as the mark's potent allure was enhanced by Thursday's move. Fears persist that German rates could rise again this autumn.

British investors were especially worried by a surprising increase in mortgage rates by Cheltenham & Gloucester, the sixth largest building society - triggered by a need to compete with a highly successful National Savings bond. Aggressive government marketing of the First Option bond is another indication of its need to finance the swelling budget deficit.

In London, the FT-SE 100 Index of leading UK shares fell by 51.5 points, to 2431.9, the steepest daily fall since the March Budget. On Wall Street, the Dow Jones Industrial Average closed at 3331.64 points, down 29.99.

Shares fall, page 17

Money, page 20

House sales, page 37