A RAMPANT Wall Street was just the tonic the British market needed, projecting the FTSE 100 index through its previous all time closing high, after London had endured a disappointingly quiet morning session.
The Footsie ended the day a net 10.6 up at a record close of 4038.7, and looked set to run on again this morning, dealers said, and launch an attack on its previous all time intra day high of 4046.8.
The buoyancy of the leaders did not run through to the second liners, however, with the FTSE 250 index settling a net 0.3 off at 4443.5. The FTSE SmallCap performed creditably, pushing up 3.6 to 2182.4.
Adding to an air of eupnoria in the leaders, triggered by the Dow Jones Industrial Average's emphatic move through 6,000, was a strong feeling around trading desks that more takeover activity is imminent.
A late story circulating in London was that a bid for Blenheim, the exhibitions group, from United News and Media, is imminent after suggestions that the latter had bought a 15 per cent plus stake in Blenheim from Compagnie Generale des Eaux, the French utility.
Even if the United News bid for Blenheim does not materialise, there are strong hints that VNU, the Dutch publishing group, is intent on raising its existing stake in Blenheim by a further 10 percentage points.
Elsewhere, last week's stories of potential bids in some sectors, notably insurance and leisure, were revived, with Commercial Union, the insurance company, and Manchester United heavily bought by speculators.
A note of caution was injected by some observers, however, who point out that the great crash of 1987 occurred on October 19th (which falls this year on a Saturday), but that the scene for the decline was set on the preceding Friday. This Friday sees the expiry of Footsie index options.
The session began on a subdued note, with the defection of another Tory MP to the Liberal Democrats undermining sentiment.
Some slightly disturbing news on producer prices also caused problems, with gilts looking decidedly unhappy during the early part of the day before steadying.
Asked about the market's short term potential, one senior market maker said: "It feels fine. The talk around the place is that we'll challenge 4.100 by the end of the week."
Another said market makers had been caught short of stock and were having to pay up to close their short positions.
"Institutions flush with cash and a host of bid stories is a potent cocktail in this market," he said.
