The UK equity market shook off the worries that had plagued investors on Monday and the FTSE 100 advanced back above 5,200 yesterday. The blue-chip benchmark was never in negative territory during the session and closed 47.5 points higher at 5,212.1.
Trading on Monday had been dogged by fears over the collapse of Enron; Argentina's financial difficulties; and rising Middle East tension. But investors seemed willing to put those worries aside and concentrate once again on the hopes for recovery in 2002.
Figures from both the British Retail Consortium, released late on Monday, and the Confederation of British Industry (CBI) revealed that retail sales remained robust in November. In the CBI survey, the balance of retailers reporting rising sales rose to 29 percentage points from 19 in October. Meanwhile, the Nationwide Building Society said that house prices, which had dipped in October, rose by 0.7 per cent in November.
The data appeared to indicate that consumer demand remained robust and that the Bank of England's Monetary Policy Committee (MPC) would not cut rates when it announced its decision today.
Yesterday's rally was led by two of the stocks that suffered the heaviest punishment earlier in the year, Invensys and British Airways, which was upgraded by Goldman Sachs. Pharmaceutical stocks also performed strongly.
But BT's latest restructuring plan and job cuts received the thumbs down from the market.
Wall Street gave the UK market some moderately positive impetus, with the Dow Jones Industrial Average opening more than 50 points higher, although it lost much of those gains by the London close.
Oil shares continued to attract support as the market pondered the chances of non-OPEC producers agreeing to output reductions of about 500,000 barrels a day, to support oil prices.
"It would be one thing for the non-OPEC producers to agree to such a reduction but another thing for them to abide by that," said one oil specialist.
Activity in the oil majors was fast and furious with BP finishing the session a shade firmer at 517p, and with turnover expanding to 90 million shares.
