Widespread relief that the US Federal Reserve's open market committee had decided to leave interest rates on hold, plus a much happier performance by Asian stock markets, provided a perfect background for British stocks to extend Tuesday's rally.
And there was more good news for equities from a highly successful auction of £3 billion sterling-worth of 30-year gilts.
The auction was covered 2.26 times, and saw gilts make excellent progress, with the 30-year issue up 17 ticks towards the close of trading.
The FTSE 100 index raced up a further 29.6 to 5,907.4, extending its rise over the past two sessions to 81.2 or 1.4 per cent, while the FTSE 250 and FTSE SmallCap, the two junior indices, both hit new intra-day and closing records. The former closed above 5,800 for the first time, finishing 30.3 ahead at a record 5,825.5.
The FTSE SmallCap settled at a new intra-day and closing high of 2,774.3, up 13.8 on the session.
Just about the only grouse from the ranks of market-makers manning the City's trading desks was a rather disappointing level of activity accompanying the strong gains in the FTSE 100 stocks. Turnover at 6 p.m. was 963 million shares. Non-FTSE 100 stocks accounted for 56 per cent of the total.
Dealers said the looming long bank holiday weekend would probably ensure that turnover levels fell away rapidly ahead of the three-day break. They also pointed out that many European markets are closed today for Ascension day, which would cut off the substantial supply of activity emanating from continental fund managers.
Footsie was up and running from the outset, gathering momentum throughout the morning and carrying on upwards after Wall Street opened on a firm note.
Earlier, Wall Street's rather surprising sluggishness towards Tuesday's close had prompted some London dealers to preach caution. However, that wariness soon disappeared in the light of some well-received corporate reports and the continuing takeover speculation enveloping all sections of the British market.
The news from Indonesia, which had contributed to the market's unhappiness in recent sessions, was much more positive, and helped the Jakarta index rally 2.5 per cent. Hong Kong rose 1 per cent and Tokyo nearly 1 per cent.
Bank shares, badly affected recently by interest rate concerns and the OFT investigation into Northern Rock's restructuring of some of its customers' accounts, built strongly on Tuesday's revival.
Helping the movement in the sector was a Bank of England report on the banking industry indicating that conditions for sector consolidation remain favourable and that several large banks with surplus capital may consider acquisitions this year.
Not all observers shared the market's bullishness. Mr Richard Lake, technical analyst at Brewin Dolphin, the stockbroker, remained cautious about the FTSE 100: "In my opinion, a setback to the 5,500 to 5,700 is still quite possible in the short term," he said in his latest note.
