AN overwhelmingly successful debut for Orange, the cellular phones group, relief at the outcome of the £3 billion sterling gilts auction, and a rumour that a FTSE 100 bid could arrive this morning gave a much better feel to the British stock market yesterday.
The mood was also helped by a growing conviction among traders that most of the damage caused to sentiment by the BSE scare was now priced into the market.
At the close of a trading session featured by exceptionally heavy activity in a number of individual stocks, the FTSE 100 index ended 11.5 points up at 3,672.4. The index had lost 46.1, or 1.2 per cent, over the previous two sessions, when gilts and shares were hurt by the mad cow disease controversy.
The FTSE Mid 250's performance was equally impressive, with that index once again crossing the 4,300 level and settling 11.5 ahead at a record 4,305.7. The Mid 250 has held up impressively relative to the FTSE 100 this week, mostly because of heavy downwards pressure on the leading index from the futures market.
It was evident from the outset yesterday that much of the downside pressure being exerted on the Footsie future evident over the past two weeks had dissipated.
The day began brightly, with Wall Street's overnight strength, which saw the Dow Jones Industrial Average up 27 points, prompting an early 7.9 rise in the Footsie.
Although there was plenty of nervousness about the £3 billion auction of five year gilts, this subsequently disappeared with news that the auction was covered 2.64 times. Gilts moved ahead smoothly in the wake of the result, helping equities along the way.
A mid morning bout of profit taking was easily absorbed, dealers said, and prices ran ahead again, reaching the day's best over the lunchtime period. A slightly disappointing performance by Wall Street during the late afternoon took the edge off the market.
Thereafter, traders were preoccupied with the debut of Orange. The shares, priced at 205p, kicked off at 240p-245p, well above the most optimistic estimates of around 230p-235p, but eased back after some heavy profit taking. Turnover in Orange reached 74 million shares, almost 8 per cent of the market total.
The good news gave a boost to British Aerospace, which saw its 31.6 per cent shareholding in the group reduced to around 22.7 per cent in the flotation.
Adding to the excitement in the market was a £42 million share buyback by Iceland, the frozen foods group, a £90 million rights issue from Barrall Developments, the housebuilder, and a host of important trading statements from leading companies.
Of these, Kingfisher impressed the City with top of the range preliminary results and encouraging comments on sales during the first six weeks of its financial year. Oil shares again attracted heavy support from the US, in the wake of renewed gains in crude oil prices.
Turnover at 6 p.m. fell just short of the one billion share mark, bitting 990.7 million; nonFootsie stocks accounted for 67 per cent of the total volume.
