THERE was no evidence of any lack of confidence in the British equity market yesterday, with share prices maintaining their form throughout the trading session and closing only slightly below their best levels.
The driving force behind British equities, and the rest of Europe's stock markets, once again came from the US, where the overnight surge through the 5,600 level on the Dow Jones Industrial Average provided the initial impetus.
At the close, the FTSE 100 index showed a rise of 21.0 at 3,747.6. The market's confidence was even more pronounced in the second-liners, where the weight of buying power drove the FTSE Mid-250 index to an all-time closing high of 4,160.3, up 8.1. The Mid-250 hit its previous peak in February 1994.
Although Wall Street was looking increasingly volatile as the US session wore on, London market-makers adopted a relatively relaxed view of potential short-term trends.
"London has under-performed Wall Street by a long way this year and that provides a comfortable cushion," said one senior market-maker. He said last week's retreat by the FTSE 100 had shaken out most of the loose holders in London.
"There was no evidence of any large-scale sellers around when the market was accelerating," he said, adding that the short-term trend in London was upwards.
The head of market-making at one of the European securities houses said London had begun to falter at news of the disappointing book to bill ratio news from the US, but had then attracted a fresh bout of buying interest as Wall Street recovered from its initial weakness.
It seems the whole world is looking for a big setback on the Street, but every time the Dow is pressured, it fights back and demolishes the bears," he said, although he warned that 3,780 on the Footsie would prove a stumbling block.
There could be more problems for the market this morning with news of the Bank of England's inflation report, as well as a host of economic data on unemployment, average earnings and unit wage costs.
Sentiment in London was positive from the outset, with the Footsie kicking off IS points ahead and remaining well bid for the rest of the session in spite of Wall Street's opening slide, which saw the Dow some 30 points down before embarking on a determined recovery.
There was plenty of excitement in individual shares, with Reuters topping the FTSE 100 performance league and posting a near 5 per cent gain in the wake of top-of-the-range results and confirmation that the company intends to return cash to shareholders the market was banking on either a share buyback or special dividend.
In contrast, BP was a substantial disappointment, the stock price slipping back as news of an increased dividend was offset by worries about continued pressure on the group's chemicals business and by the company's cautious outlook on prospects for the oil price.
The build-up of activity in equities was clearly demonstrated by turnover levels by 6 p.m., market turnover had reached 922.3 million shares. Retail business on Monday was worth £1.55 billion sterling.
