Market report: Wednesday close

RISING US interest rates had investors in the world's big financial centres on the run today. Share prices fell sharply on Wall Street overnight after the US Federal Reserve raised rates by a further quarter-point to 2.75% - the seventh rise since June last year.

And there may be more to follow. That seemed to be the threat from Fed chairman Alan Greenspan, who continues to worry about growing inflationary pressure within the US economy, which is already staggering under the weight of a massive budget deficit.

The selling in New York spread to the Far East this morning, with share prices in Tokyo down 1% and almost 1.5% in Hong Kong. In the face of such heavy one-way traffic, London had only one way to go - down. The FTSE 100 index, the barometer of leading shares, fell 26.9 at 4910.4.

Equities remain in vogue, but investors continue to square-up their portfolios ahead of the Easter break. Investors were unable to draw much comfort from full-year numbers from a clutch of retailers.

Woolworths drifted ½p to 54p, while supermarkets chain Wm Morrison was down 3½p at 198¼p, and Kesa Electrical 10p lower at 299p. Next Groupwas the exception, rising 19p to 1599p

The bullish trading update from easyJet yesterday appears to have created a favourable impression in the City. US broker Goldman Sachs raised its earnings estimate for the no-frills airline from 13.92p a share to 16.24p for the current year and from 14.44p to 17.76p for next year.

Ryanair has also been upgraded from 33 cents a share to 34 cents for this year and from 37 cents to 38 cents for next. EasyJet came off the boil, slipping ¾p to 212p, while Ryanair firmed 28 cents to €6.15.

This year will be crucial for Reuters, the international news agency and financial information systems provider, says broker Investec Securities. It claims the group is on target to achieve savings of £440m in 2006 as part of its Fast Forward strategy. After four years of decline, underlying recurring revenue growth is predicted to turn positive, and the company could finally dispose of its electronic share trading business Instinet. Investec rates Reuters, 3p cheaper at 407p, a buy.

Medical Solutions tumbled 1.50p to 6.50p after seeing losses last year grow from £2.3m to £9.4m. Sales failed to materialise after spending the previous year to ramp up production. This year, sales in its liquid-based cytology division have been 'encouraging', while sales within its UK diagnostic pathology business 'remained sluggish'. Medical Solutions said it will retain expectations for the rate of revenue growth in 2005, albeit from a lower base in 2004 than originally expected.

Electrocomponents shed a further 2¼p to 248¼p in the wake of yesterday's profits warning. But the fall has prompted broker Credit Suisse First Boston to upgrade the shares from underperform to neutral. Electrocomponents said it expects pre-tax profit before goodwill amortisation for the year to 31 March, to be slightly below last year.

The broker argued that today's upgrade is based on the sharp fall in the share price and that a sustained dividend payout should now provide some support to the shares.