THE London market's recent preoccupation with Wall Street's stream of turbulent performances was set aside yesterday as British shares surged ahead on growing expectations of interest rate cuts.
The rate cut hopes, which have been on the back burner recently, emerged strongly yesterday in the wake of the latest UK Purchasing Managers' index which came in at a disappointing 49.8 per cent, against January's 50.3 per cent.
Mr Kenneth Clarke, Chancellor of the Exchequer, is due to attend his regular monthly meeting with Mr Eddie George, governor of the Bank of England, on Thursday.
Talk around the market was that a reduction of 25 basis points was on the cards. Certainly the gilts market looked as if it had already factored in a reduction the 10 year gilt closed up around 11/4 points, while the 20 year gilt was up 13/4 points.
The FTSE 100 index rode out the latest extreme volatility on Wall Street. Footsie held on to most of its earlier gains, closing a net 25.1 up at 3,725.7. The index is now only 28.7 short of its previous closing high, reached on February 2nd.
Yesterday's rise enabled the Footsie to post a 12.4 point gain in a week when the government's vulnerability in the House of Commons was put to the test by the debate on the Scott report.
Once again the second line stocks, which have out paced the leaders this year, came up with the goods, with the FTSE Mid 250 cruising up a further 21.4,
