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London Shares Fall 35.8 Points

May 11, 1988

LONDON (AP) _ Stock prices closed sharply lower Wednesday as players dumped shares amid fears of higher interest rates.

The Financial Times-Stock Exchange 100-stock index closed down 35.8 points, or 2 percent, at 1,756.8.

Volume was a hefty 575.5 million shares, compared with Tuesday’s 397.5 million.

Stock prices opened lower as the market bearishly interpreted a comment from Chancellor of the Exchequer Nigel Lawson that major industrialized nations might coordinate a worldwide hike in interest rates.

The comment, published in European editions of the Wall Street Journal, pressured London for most of the session.

During the day, the newspaper issued a statement saying it had failed to fully report Lawson’s remarks.

Meanwhile, Chase Manhattan Bank boosted its prime lending rate a half percentage point to 9 percent, the first increase since just before the stock market crash in October.

However, Charles Larkham, an equity analyst with the London investment firm James Capel and Co. Ltd., said: ″We don’t think it’s the beginning of a major lurch lower″ in stock prices.

Another dealer said the rampant takeover talk that had fueled the London market over the last month had run out of steam.

″The market had been spoiling for a sell-off for quite some time and when no takeover bids panned out,″ players liquidated their positions, he said.

A lower finish in Tokyo earlier Wednesday added to the downward pressure, several analysts said.

A few bargain hunters were spotted late in the day attempting to take advantage of the sharply lower prices, but the market failed to make a significant turnaround, dealers said.

″Prices didn’t have the stomach to bounce back by the end of the day as they did Tuesday,″ one dealer said.

-11-88 1412EDT

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