Day ends with good gains after recovery from jitters

While never totally convincing, London's equity market delivered a highly encouraging performance yesterday, recovering from an early bout of the jitters to finish the session with further good gains.

Once again there was no hard news of any developments concerning the threatened moves by the US and others against terrorist targets but there was plenty of economic news for the market to get to grips with.

Dealers refused to get carried away by hopes that the rally in UK stocks is the shape of things to come in the short and medium term.

"It is heartening to see the market rally but we all know there is plenty of bad news to come and it could last for some time," said one trader.

He said it was equally encouraging that the market had made progress in the face of the shock profits warning from EMI, but said this was a timely reminder of the impact of earnings of the economic problems facing the US and Europe.

At the close of another busy session the FTSE 100 was 49.5 higher at 4,663.4, for a two-day rally of 229.7, or 5.1 per cent.

Even more pleasing for observers was the fact that the rally was once again market-wide, encompassing the FTSE 250, SmallCap and Techmark 100 indices.

The 250 index recrossed the 5,000 level, finishing 95.2 firmer at a session best of 5,024.6, while the SmallCap jumped 30.3 at 2,143.8 and the Techmark 100 advanced 25.88 to 1,151.25. Behind the market's latest drive forward was an initial positive reaction on Wall Street to the US Conference Board's consumer confidence index for September, which fell to 97.6, compared with a consensus forecast of around 100.

That slide was interpreted as likely to trigger another 50 basis points cut in US interest rates after the October 2nd meeting of the Federal Reserve's open market committee.

The FTSE 100 winners table was loaded with "old economy" stocks and featured many of the banks and insurance companies which had been badly hammered in the recent sell-off. The losers were highlighted by the near-collapse of EMI after its warning of a 20 per cent decline in full-year earnings.