The six-session sequence of losing performances by London's equity market was brought to a halt yesterday, as investors responded to takeover news, a positive trading update from one of the UK's leading banks and some encouraging economic news from Europe. The TMTs (technology, media and telecom stocks) also attracted plenty of support, having been badly hit during the market's recent setback.
Added to that was a good showing by Wall Street on Friday when the Dow Jones Industrial Average pushed up 44 points and the Nasdaq edged higher and again at the outset of US trading yesterday.
Yesterday's better performance was never totally overwhelming and was mostly confined to the leaders. The FTSE 250 began to make meaningful progress only during the last hour of trading and the SmallCap index lost ground for a seventh consecutive session.
And dealers pointed to the relatively low level of turnover yesterday, which, they said, was an indication that the market had begun to show signs of winding down ahead of Christmas and that turnover would get progressively lighter as the week wore on.
The only blot on the landscape, apart from the concerns about the timing and extent of the recovery in the US economy and the latest profit warnings from the smallcap sectors, was a sharp decline in GlaxoSmithKline shares. They were the worst performers in the FTSE 100 index after the group suffered a setback in the US courts over the patent protection for its Augmentin antiinfection drug.
By the end of the trading session the FTSE 100 had rallied 75.3, pushing confidently back through the 5,100 level and finishing at 5,136.
At its best, as the Dow drove through the 9,900 level, posting a three-figure gain in the process, the 100 index was up 90 points at 5,151.0. At its worst, only minutes into the trading session the index was down 22.8 at 5,038.2. The FTSE 250, depressed for much of the day, made rapid progress as the close loomed, finishing 23.2 firmer at 5,829.5, its best of the day, having fallen below the 5,800 level down to 5,796.2 at its worst.
The 250's late advance was spearheaded by big gains in a number of the TMT stocks, such as Colt Telecom, Telewest and Misys, as well as the steep rise in P & O Princess.
The FTSE SmallCap struggled all day, eventually settling 14.4 off at 2,584.0. Guardian IT posted the market's worst individual performance, its shares losing more than half their value after a profits warning.
Royal Bank of Scotland was the best individual performer in a buoyant banks sector, after it told the market that it would meet full-year earnings forecasts, in spite of an increase in bad debts.
Turnover in equities was 1.7 billion shares.
