Buoyant Wall St start helps Footsie to rally with force

The rally in UK stocks resumed with some force yesterday as a buoyant start on Wall Street helped the FTSE 100 reach its highest close since September 7th.

The blue-chip benchmark surged 143.3, or 2.9 per cent, to 5,153.1.

The FTSE 250 advanced 69.1 to 5,275.9, the SmallCap 27.1 to 2,220.7 and the Techmark 100 36.87 to 1,294.72.

Share prices were subdued in early trading but gradually picked up pace as the day wore on, surging during the afternoon session after Wall Street opened, with the Dow Jones Industrial Average quickly notching up a triple-digit gain.

There was relief that key companies such as Pepsico had produced profits in line with expectations. And, a month after the events in New York and Washington, investors seem encouraged by the apparent absence of any further terrorist attacks.

The best performer in the FTSE 100 was Sage, the accountancy software group, which said it still expected to report full-year figures in line with forecasts.

Oil stocks were very strong as the crude price moved higher on expectations of further cuts in production from Opec.

But the rally was pretty broadly-based with only the defensive stocks, such as BAT and Cadbury, failing to benefit from the improvement in sentiment.

However, while the FTSE 100 has regained its pre-September 11th levels, the rest of the market has not. The FTSE 250 is 8.2 per cent below its close on September 10th, the SmallCap is 10.8 per cent lower and the Techmark 100 is down 3.4 per cent.

And the corporate sector continues to issue bad news, particularly at the midcap and smallcap level.

Jarvis Hotels said yesterday that its trading had been hit in the wake of the terrorist attacks while biotech firm Xenova saw its shares suffer after Glaxo SmithKline quit a drug development partnership.

Bad news on the military or economic front could still prove a tough test for the UK market in the days ahead. The next significant US economic data will come in the form of weekly jobless claims today and Michigan consumer sentiment on Friday.