The British equity market's rehabilitation was taken a stage further yesterday, although stocks closed well below the day's highs. Dealers remained cautious about short term prospects, insisting that global markets were extremely nervous about events in Asia.
Once again, the good news driving London and other global stock markets started in the US on Tuesday and carried on into Asian markets, finally bringing out the buyers in Europe.
The Dow Jones Industrial Average added another 84 points on Tuesday, while Hong Kong, up almost 6 per cent, Singapore, up 7.5 per cent and Jakarta, 5.7 per cent higher, were the pick of the Asian markets.
There was, however, less good news for London stocks as the Dow came in mixed at the start of trading yesterday following a stronger-than-expected retail sales figure for last month.
International events outweighed some rather disturbing domestic economic data released yesterday, which caused a decline in gilts amid fears that another increase in British interest rates might now be on the cards.
The losses in gilts, which showed longer dated issues down well over a full point, stemmed from a much stronger-than-expected employment report; a higher than forecast increase in underlying average earnings; and from the minutes of the December meeting of the monetary policy committee.
At the close of a busy day in the market, the FTSE 100 index posted a 23 gain at 5106.9, extending the rise over the past two sessions to 38.1. The index closed well below the day's best, 5135.8, reached just before Wall Street kicked off.
Rises in the FTSE 250 and FTSE SmallCap were more muted, but both still managed to record useful rises. The 250 index put on 6.8 at 4,823.3 and the SmallCap 10.0 to 2,350.1.
Dealers were by no means disappointed with the level of turnover in equities yesterday which continued to compare favourably with pre-Christmas activity.
By 6.00 p.m. turnover was 900 million shares, the highest daily total this week.
There was no shortage of individual features in the market. Fears that the poor performance of Kingfisher's Comet electrical retailing division would see Dixons similarly affected, were confirmed by the latter which accompanied its annual Christmas trading update with a profits warning that hit its share price.
Financial sectors were broadly higher, especially the banks, which reflected relief over the situation in Asia.
But General Accident was among the FTSE 100's losers as the market took into account the company's exposure to the big freeze in Canada.
