London's benchmark index, the FTSE 100, recovered all of the ground lost in the frantic five minutes of Monday's post-market auction, and finished the session in good heart ahead of the interest rate announcement from Washington which came long after London closed for the day.

There were few in the market that were taken by surprise at the instant recovery yesterday morning in the stocks so badly mauled by the sell-off, a clear signal to the market that a mistake had been made.

The big gains were mostly concentrated in the highly liquid international stocks, such as the oil majors, BP Amoco and Shell, Glaxo-SmithKline, Vodafone and the banks.

Spread betting firms had been predicting an opening level of around 5,800 and that forecast was broadly correct, the index up almost three figures within minutes and pushing ahead for much of the rest of the session. At the finish of the session, the FTSE 100 was up 152.4, or 2.3 per cent, having been up 167 points at best.

For the rest of the market, however, it was a much more relaxed day. "Outside of the top 100 stocks, and a handful of special situations, it was a quiet day, as one would expect ahead of an FOMC decision and especially ahead of such a crucial one as this," said one trader.

Wall Street, which endured a quiet session on Monday night, was similarly subdued yesterday running up to the US interest rate news. Dealers in the City were bracing themselves for plenty of action this morning, however. One said the market was still expecting a 50 basis points reduction which, he claimed, would support the market.

The FTSE 250 eased 6.9 to 6,484.5 and the FTSE SmallCap was finally 3.0 firmer at 3,097.4, both having moved in a tiny trading range. It was a much better day for the Techmark 100 which closed 33.03 to the good at 1,995.18, with 10 out of the top 20 FTSE 100 stocks coming from the TMT sectors.

On the domestic economic front, the inflation data for April came in slightly above expectations and caused no problems.

Turnover in equities was 1.71 billion shares. Turnover on Monday was 1.63 billion shares, the lowest daily volume since April 17th.