Market prepares for bad news in survey

THE STOCK market was in downbeat mood yesterday on fears that today's industrial trends survey from the Confederation of British Industry will suggest that the economy is sliding deeper into recession, writes Robert Chote.

The FT-SE index of 100 leading company shares fell 29.2 points to 2,348, nearly 400 points adrift of May's all-time high. The CBI survey will show that manufacturers are less optimistic than in June about stepping up production over the next four months.

Shares of companies with significant US interests suffered as the dollar endured a bumpy day on the foreign exchanges. The US currency began under pressure, with Middle Eastern selling of dollars for sterling, and took little comfort from the 0.5 percentage point cut in the Japanese discount rate to 3.25 per cent.

The Japanese rate cut also did little to help Tokyo shares, with the Nikkei average losing a 476- point gain in late morning to end the day 124.45 points down at a six-year low of 15,373.34.

The dollar ended the day 0.9 pfennigs lower at DM1.4860, while the pound gained 1.2 cents to finish at dollars 1.9115. 'The dollar has a little further to drift down, but last week's central bank intervention has broken the fall,' Steve Barrow, of Chemical Bank, said.

The pound climbed to around DM2.8540 at midday but closed 0.4 pfennigs down at DM2.8449.