LONDON'S equity market delivered a surprisingly buoyant performance on the penultimate trading session of the year, with the FTSE 100 hitting new intraday and closing records.
There was a further pleasant surprise for dealers at the level of turnover in equities on what had been expected to be a quiet, featureless trading day.
Some 423.9 million shares had traded by the 6 p.m. cut off point, with non Footsie stocks accounting for 53 per cent of that figure.
With the head count at many big dealing rooms said to have been at 60 per cent, those on the desks were kept busy until the late afternoon.
At the close of a busy session, the FTSE 100 was 24.7 up at a new closing and intra day peak of 4,115.7.
Good news in the leading stocks spilled over into the rest of the market, with the FTSE Mid-250 index finally 14.3 better at 4,484.8, closing the gap on its all time high of 4,568.6 reached in April this year.
The SmallCap moved up 7.6 to 2,176.8, compared with its peak of 2,244.30, attained in June.
The stimulus for London came from across the Atlantic again, where last Friday's record close on the Dow Jones Industrial Average was followed by another sharp rise at the outset of trading yesterday.
Up 14 points on Friday, the Dow put on a further 25 points shortly after the opening yesterday, a move which gave European markets a substantial shot in the arm after a generally firm morning session.
The equity market's move to new peaks was more impressive, given that the gilts market had to endure a difficult trading session, edging forward during the morning before coming off late in the session as US Treasury bonds trickled easier, following a higher than expected 1.8 per cent increase in US home sales.
The home sales numbers offset what were seen as neutral leading indicators for November.
London's good start came amid a flurry of new year tips from the financial press and leading brokers. Sentiment was lifted by widespread publicity given to a series of bullish forecasts for the FTSE 100 in 1997.
Of these, NatWest is the most confident of the leading brokers, forecasting a 1997 year end close of 4,600 for the Footsie. NatWest's equity market strategists say the market is "well supported by strong GDP growth, which will feed through into continuous robust performance on earnings and dividends".
NatWest expects a new Labour government to bring inflation back below 3 per cent, which would provide a spur to the gilts market.
Among the main beneficiaries of the New Year recommendations was British Aerospace, one of NatWest's top 15 stocks for the year and one of the best performing FTSE 100 stocks during 1996.
Other winners yesterday included BTR, Pearson and United Utilities, the latter following a report that the government has abandoned plans for wholesale competition across the industry.
