Strong earnings and employment data, and a warning about their impact on inflationary pressures, put paid to an early burst of strength that stretched across London's equity market.
Up over 43 points and back above the 6,000 mark within an hour of the opening, the FTSE 100 index subsequently retraced all its early gains and fell into negative territory before regaining some of its confidence later in the session.
The leading index finished the session 16.2 ahead at 5,972.9.
Once again, there were no problems for the market's medium-sized and smaller stocks, with both the FTSE Mid-250 and FTSE SmallCap indices maintaining their seemingly relentless onward march. Both hit fresh intra-day and closing highs.
At its best, the FTSE Mid-250 hit an intra-day peak of 5,794.6 before settling 9.2 up at a record 5,788.9.
The FTSE SmallCap, meanwhile, ended the day at a closing and intra-day high of 2,743.7, up 4.6. Footsie's recovery came in the wake of US economic news, notably a smaller than expected increase in US retail sales. That news offset a slightly stronger than forecast increase in US producer prices, up 0.2 per cent on the month against a consensus forecast of 0.1 per cent.
Sentiment in London at the start of the day was strongly positive, with dealers taking their cue from Wall Street's powerful performance on Tuesday, where the Dow Jones Industrial Average finished 70 points ahead and only around 30 points from its record closing high of 9,192, reached earlier this month.
One of the few worrying developments was the latest rioting in Indonesia which put that country's stock market under renewed pressure. Sentiment in Hong Kong also deteriorated, with the Hang Seng off 2.5 per cent.
But the London market's initial confidence was thoroughly shaken by the news that underlying average earnings had risen by an annualised 4.9 per cent in February, well ahead of the 4.5 per cent consensus forecast. Similarly, unit wage costs in the March quarter rose by an annualised 5.4 per cent, compared with expectations of a 5 per cent increase.
The unemployment total in April fell by 17,700, much more than the expected 10,000.
The market leaders gradually gave way, finally moving into the red over the lunchtime period and posting a session low of 5,949.5. But with the Dow pushing ahead again, breaching the 9,200 level and looking increasingly likely to post a new closing peak, London managed to finish the day in robust fashion.
Fund managers were none too surprised by the continuing strength of smaller stocks. "Any offers of new issues are being grabbed with both hands without too many questions being asked; it just has to be top of the market stuff," said one small companies specialist. Turnover in equities was 854.4 million shares at the 6 p.m. count.
