A SHARP pick-up in turnover, and a welcome bout of profit-taking in a recently rampant sterling, proved to be just what London's equity market needed yesterday.
Share prices were on the move from the outset, and gathered pace throughout a busy trading session to close not far short of the day's best and within sight of the FTSE 100 index's all-time closing and intra-day highs.
Initial progress on Wall Street yesterday gave further impetus to a solid performance from British stocks. Footsie, which has been under various degrees of pressure since the middle of last week when sterling began to make rapid strides against the dollar and the D-mark, closed 23.0 higher at 4,061.5.
Shares in the big British exporting companies have been hit by the pound's jump.
The index is only 12 points off its best-ever close, reached on October 21st, and only 33.3 below its highest-ever intra-day level, attained on November 26th.
The other leading indices, the FTSE Mid-250 and SmallCap, were rather left behind by the leaders, with traders taking the view that the institutions were moving funds into shares via the FTSE future and the leading issues.
The Mid-250 nevertheless rose 12.8 to 4,427.6, while the SmallCap added 1.3 at 2,161.3.
There was a slight feeling of unease in London towards the close, however, as gilts finished the day down a few ticks in the medium to long maturities. Mr Richard Jeffrey, group economist at Charterhouse Bank, said: "There was the first hint of caution in gilts for some time". Turnover increased sharply from Monday's dismal levels, boosted by a series of big utilities deals after the Treasury sold its remaining residual share stakes, including large amounts of British Energy, National Grid, Scottish Hydro Scottish Power, Severn Trent and others, via competitive auctions with the big London marketmakers.
At the 6 p.m. calculation, overall turnover in London was a hefty 847.3 million shares, with non-FTSE 100 stocks eventually accounting for just over 61 per cent of the total. Customer business on Monday was revealed as a dismal £671.3 million, one of the lowest daily figures for many months.
Senior market-makers were generally bullish on the short to medium-term outlook for London stocks. One said he expected Footsie to run on towards 4,200 and then take a breather, but he emphasised the lack of selling pressure recently, despite the currency factor.
Asked about the possibility that London was close to the peak of the bull market, another pointed out that a common feature of a mature bull market was a build up of stock market activity "something that is distinctly lacking in the UK at present".
