The rest of the market bore the scars of a further retreat in the Nasdaq, where fears of more bad news on corporate earnings remained uppermost. The FTSE 100 opened lower, but hit its worst levels in the late afternoon before closing 126.4 points lower at 6,264.8. Volumes, at 1.2 billion shares traded, were relatively light, however, suggesting an institutional stay-away rather than panic selling.

The biggest casualties were the highly rated tech and telecoms stocks, which tend to suffer worst from US gyrations. Baltimore Technologies, the biggest faller in the FTSE 100, dropped 55p to 605p, followed by Telewest Communications, down 11p at 127p, the cable operator recently excited by talk of a merger with ntl.

Vodafone Group did the greatest damage in index terms, losing 10p to 243p, hampered by reports that it will buy the mobile telecoms unit of Ireland's Eircom. Colt Telecom gave up 72p to £18.28, with Cable & Wireless 35p cheaper at 895p.

The FTSE 100 came under additional pressure from the banking sector, which was spooked by fears of further interest rate rises and reports of a windfall tax. Barclays lost 81p to £17.95, tracked by HSBC, 43p lower at 960p, Standard Chartered, off 45p at 967p, and Bank of Scotland, down 34p to 605½p. However, Halifax improved 2½p to 547p on an upbeat statement from the company on the initial roll-out of its IF offshoot.

Weak market conditions stoked demand for classic defensive stocks. BAA put on 13½p to 583½p, Scottish Power added 9p to 535p, while Tesco firmed 3½p to 249¾p. GUS was helped 2p higher to 439p on renewed optimism that the home shopping group will float its Experian arm in the US. GKN, the engineer, benefited from a positive response to its current series of investor briefings.

But ICI resumed its fall, shedding 18p to 161p, despite bullish noises from Commerzbank, which retains an accumulate rating.

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