THE London market continued its seemingly relentless rise yesterday with the FTSE 100 index setting record intraday and closing highs.
The strength of Wall Street, where the Dow Jones Industrial Average closed above 6,000 for the first time on Monday, gave an early lift to London, and Footsie opened at 4,050.1, up 11.4 points.
The background was almost uniformly positive. A number of European stock markets also notched new highs. Sterling continued its recent rally and gained two pfennigs against the deutschmark on the day, while gilts were also buoyant, with the benchmark 10-year issue rising by around a third of a point.
Bid activity returned to the market with the announcement of the long-awaited offer for Blenheim, the exhibitions group, from United News & Media.
Although the £592 million offer had been trailed for months, it should still put further cash into institutional coffers, already swelled by dividend payments and share buy-backs.
The only significant negative factor was the decision of the regulator, Ofwat, to bring forward its price review of the water industry, but since it was widely expected. the news caused only modest damage to share prices in the sector.
The Dow opened strongly again yesterday, with the help of good results from a host of corporate giants, including those of Intel, which were published after the US markets closed on Monday. That gave a further lift to the British market at the start of the afternoon.
However, the Dow lost much of its gains as the afternoon drifted on and London weakened with it. Having recorded an all-time intraday high of 4,063.2 just after the Wall Street opening, Footsie settled 12.1 points higher at 4,050.8. Junior indices also made modest gains, with the FTSE 250 rising 5.4 to 4,448.9 and the SmallCap 6.0 to 2,188.4.
The Footsie has now risen by 11.5 per cent since the middle of July, when investor concern about a possible rise in US interest rates was at its height. The 10-year gilt yield has fallen by around half a percentage point over the same period, allowing the yield ratio to stay at respectable levels.
Analysts said the market was in an optimistic mood.
Mr George Hodgson, UK equity strategist at SBC Warburg, said that "many investors are acutely nervous about Wall Street but for the moment it is still rising and the rally in European bond markets is helping to keeping equities buoyant".
Volume was 804.8 million shares at the 6 p.m. count, of which 54 per cent was in non-FTSE 100 stocks. The value of customer business on Monday was £1.28 billion.
