LONDON's equity market was one of a host of European markets to hit all time highs yesterday, with the two main indices, the FTSE 100 and the FTSE Actuaries All Share Index, both recording new peaks. The FTSE future, too, closed at an all time high, while the FTSE Mid 250 index hit its best level for almost two years.
At the close, the FTSE 100 was 27.7 firmer at 3,715.6, while the All Share was up 12.18 points at 1.815.96. The Mid 250 index was finally 17 points ahead at 4,053.9.
The main driving force behind the gains in London came from Wall Street, where the Dow Jones Industrial Average, after surging over 60 points on Tuesday evening, raced ahead again at the outset of trading yesterday, breaking through the 5,200 level. An hour after London closed for business, the Dow was around 20 points higher.
Another powerful bull story said to be encouraging buyers into British equities was that a fresh batch of mergers and bids could be about to emerge in London.
Among the rumoured bid targets are Asda, GRE, Sedgwick, Rexam and Aberdeen Trust. And HSBC was rumoured to be about to acquire one of the larger British building societies.
A late story circulating in the City was that an increased offer for Forte, the hotels and leisure group, would be announced either this morning or tomorrow. Rumours suggested that Granada would increase its offer from just below 330p to 370p in cash, a level which some leisure specialists say could win the day for Granada.
Wall Street's spectacular gain overnight, in response to a wave of New Year buying and hopes that the US budget wrangle would soon be resolved, ensured a strong opening for London.
The market's concerns on Tuesday over the possibility that the government might be forced into a premature general election this year began to fade into the background, as dealers focused instead on the potential positives of such an event.
It was conceded, however, that the political uncertainties in Britain could unsettle gilts, which would restrain enthusiasm for equities.
The Footsie powered through the 3,700 level at the outset of trading and was always comfortably above that level throughout a busy session, which saw turnover at 6 p.m. reach an impressive 734.9 million shares, well ahead of Tuesday's 450.9 million.
Turnover was boosted by a large placing of National Grid stock, and some keen activity in banking and telecom shares.
At its best, shortly after Wall Street opened for business, the FTSE 100 reached a peak of 3,719.8, before falling back on profit taking.
