By the close of business in London, the much-feared bout of flu on Wall Street turned out to be nothing more than a sneeze. This still couldn't breathe any new life into the London markets, though, and the

FTSE 100

ended down 105.7, or 1.7%, at 6,274.1.

The short term doesn't look too promising either. Investors who are hanging on in the hope of better times may find their positions squeezed even further as the U.K. market still runs the risk of catching a severe cold ahead of the Feb. 1-2

Federal Open Market Committee

meeting, which is widely expected to sanction a 25-basis-point rise in the fed funds rate to 5.75%.

The U.K. trading session was complicated by a train strike affecting much of South London, and with investors electing to sulk over higher-than-expected inflation data and growing concern over another rise in interest rates, it was none too easy to find any signs of encouragement.

Some solace did come in the form of

British Gas

(BRG) - Get Report

, which jumped 24 to 399p after a strong recommendation from

Lehman Brothers

.

Hopes of further consolidation in the media sector saw

Daily Mail & General Trust

rise a further 25p at 23.29 pounds.

EMI Group

held onto earlier gains, rising 15 to 735p as investors warmed to news of its planned merger with

Time Warner's

(TWX)

Warner Music

.

Cable & Wireless

(CWP)

provided another oasis of hope with a gain of 45p at 12.35 pounds after the company revealed Monday it is in talks to merge its Hong Kong subsidiary with

Singapore Telecommunications

.

In the retailing sector, recently bombed out

J. Sainsbury

rallied 9 1/2 to close at 348p, but recent takeover favorite

Marks & Spencer

fell 12 to 292p, with investors failing to derive any inspiration from the appointment of new chairman Luc Vandevelde from the French group

Promodes

.

British Biotech

collapsed as investors reacted with dismay to the third failure of one of its clinical drug trials -- the share price fell 18 1/2 to 28 3/4p.

Progress towards the planned merger between

Glaxo Wellcome

(GLX)

and

SmithKline Beecham

(SBH) - Get Report

left both share prices under sedation, the former slipping 28p to 15.48 pounds and the latter 25 lower at 696p.

The major continental bourses fell early Tuesday and stayed in negative territory the rest of the session. The

Xetra Dax

in Frankfurt was off 1.77% at 6809.64 and the

CAC 40

in Paris closed down 1.64% at 5597.50.

The telecom sector had mixed results, with

Mannesmann

(MNNSY)

shares closing down 7.55 at 258.60 euros, Spain's

Telefonica

(TEF) - Get Report

off 0.68 at 24.42 euros, and

France Telecom

(FTE)

in Paris ending down 4.10 at 123.10 euros.

Deutsche Telekom

(DT) - Get Report

, on the other hand, was able to rise 1.61 to 66.01 euros after formally announcing plans to float its Internet unit

T-Online

in mid-April and its wireless unit

T-Mobil

this upcoming autumn.

Technology shares in Frankfurt were also among the few able to buck the broader downward trend, as Europe's largest software maker,

SAP

(SAP) - Get Report

, closed up 17 at 772 euros and Germany's largest electronics company

Siemens

(SMAWY)

climbed 1.35 to 142.00 euros.

One of the day's biggest losers was automaker

BMW

, which tanked 1.36, or more than 5%, to 23.48 euros amid concerns that the ever-strengthening British pound could hurt the recovery of its embattled

Rover

unit.