THE FTSE 100 index sailed confidently back through the 3900 level yesterday and at one point looked poised to launch an attack on its all time intra day and closing highs, with the help of the Dow Jones Industrial Average which neared 5700 shortly after the start of US trading yesterday.
Sentiment in London was given a substantial lift by the US market's response to last Friday's non farm payroll report, which was greeted with a 52 point jump on the Dow, some benign British economic news and a flurry of mostly encouraging corporate reports.
But Footsie never really had the thrust to push it past its previous records. Turnover, by tradition relatively low on Mondays, was minimal from the outset.
Footsie ended the session 17.8 firmer at 3910.8, its fourth consecutive improvement; the index was just 11.3 points below its all time intra day high and just 7.9 off its record closing high. The FTSE Mid 250 index was equally impressive, moving up 21.3 to 4424.5. The Dow was 40 points ahead well after London closed for business yesterday.
Dealers said the bright news on the economic front had combined with expectations of a flurry of autumn takeover bids to drive share prices higher.
And there was evidence, dealers said, of a return of programme trade activity in the market place. Turnover levels in London have suffered as the holiday period has seen a dearth of programme business. Late yesterday, there was evidence of a medium sized two way programme carried out by one of the big US securities houses, thought to be Merrill Lynch.
Turnover at the 6 p.m. count yesterday came out at 546.8 million shares, with non FTSE 100 stocks accounting for 58 per cent of the overall figure. The value of customer business in equities on Friday was £1.55 billion sterling.
The day's economic news came in bang in line with market forecasts, reinforcing recent market views that inflationary pressures in Britain are under control and not likely to pose too many problems to the Chancellor of the Exchequer in the short term.
More inflation pointers are due later this week with average earnings and employment news scheduled for tomorrow and retail price details on Thursday.
Some market observers are said to be expecting a flurry of bids, including FTSE 100 and Mid-250 stocks, in the short term, especially in the wake of the Labour party's attitude towards hostile takeovers.
The 4000 level for Footsie has been pencilled in by some of the more bullish brokers, but only on the basis of a pre election flurry of takeover activity.
Big winners in the market's front line stocks included P & O, in the wake of the merger of its container shipping business with Nedlloyd, and Railtrack, whose shares extended last week's strong gains amid various rumours of stake building.
