Sentiment in British equities showed a marked improvement yesterday, as investors adopted the view that the market has already priced in rises in domestic and euro zone interest rates today. And adding to the overall bullish mood in London was the expectation that more takeover bids and mergers are in the pipeline, with the pharmaceuticals, telecoms and utilities areas responding to speculation.

Dealers said the market was also given a substantial lift in mid-session by a large programme trade, heavily weighted on the buy-side. The programme trade featured large lines of stock in the FTSE 100's heavily-weighted stocks, including 2.3 million Vodafone AirTouch, 270,000 Glaxo Wellcome and 1.4 million BP Amoco.

The junior indices outpaced the FTSE 100, with the 250 finishing the session 46.3 higher at 5,719.3, having hit 5,720.6 at its best of the day. The FTSE SmallCap gained in confidence throughout the day, eventually settling 15.8 higher at 2,659.0.

Turnover in equities was a more than decent 1.19 billion shares by the 6 p.m. count, boosted by the programme trades.