Footsie a player in market rebound

LONDON took a strong role in a general Europe-wide advance yesterday. Two out of the three main FT-SE indices hit new all-time intra-day and closing highs and the other, the FT-SE 100, moved to within five points of its previous intra-day best.

Once again it was Wall Street which provided the initial thrust for London, after the Dow Jones industrial average passed 7,000 again on Monday, although the latest batch of important company results generally helped to reassure investors.

The early flush of enthusiasm among investors began to wearout, however, especially when Wall Street moved down 20 points at the start of yesterday's trading session.

At the close, the FT-SE 100 index was 13.6 higher at 4,344.7. The FT-SE 250, meanwhile, finished a good day for the second liners up a net 23.1 at a record intra-day and closing level of 4,665.0. The SmallCap index also settled at all-time records finishing the session 2.9 up at 2,352.3.

Senior marketmakers adopted a cautious but not overly bearish stance towards the market. The head trader at one big European securities house said there was plenty of room for concern about the forthcoming Humphrey Hawkins testimony to be delivered to Congress by Mr Alan Greensnan, chairman of the US Federal Reserve, and also tomorrow's by-election in Wirral South.

"There is the chance that Mr Greenspan might throw another irrationally exuberant bombshell at the market but he has already had the chance of wrongfooting markets when he could have pushed for a rise in US interest rates," said one dealer.

He also pointed out that the Wirral by-election could produce an upset for the market if, for instance, the Conservatives show signs of a sharp improvement in popularity. "The market has already factored in a Labour victory in the election and a strong showing by the Tories might be interpreted as an early indicator of the potential for a hung parliament, which will not be well received," he said.

On the other side of the coin, the big investing institutions were said to have been pushing more cash into the market, responding to recent market forecast upgrades by stockbrokers, such as Merrill Lynch and ABN-Amro Hoare Govett.

Turnover at 6 p.m. was 821.6 million shares. The value of customer business on Friday was £2.55 billion sterling; Monday's trading valuation was not available yesterday.