Rally stretches into fourth session

Dealers in London's equity market were still celebrating Tuesday's record-breaking performance yesterday, driving stock prices sharply higher for the fourth successive session.

Such was the momentum behind the latest upward drive that the FTSE 100 index recaptured another significant level - 5,700 - in the process.

But it lost it again during a rather turbulent afternoon session that saw the Dow Jones Industrial Average relinquish an early 30point gain and fall into negative territory.

By the close Footsie was 46.1 ahead at 5694.3, having peaked at 5712.8.

Nevertheless, market-makers were impressed by the strength of the latest surge, which extended the rise over the past four sessions to almost 300 FTSE 100 points or 5.5 per cent.

"There was a feeling that Tuesday's gains were slightly overdone and that we needed more bid action to maintain that sort of progress. Although we've not had any more bids in the top 350 stocks, the market is running up on the basis that there are many more to come in the short-term," said one dealer.

Once again, London took its lead from international markets, notably Wall Street, where the Dow Jones Industrial Average posted another three-figure gain on Tuesday.

There was additional relief for Wall Street with news that the Federal Reserve's open market committee had decided to leave US interest rates on hold.

Far Eastern markets took up the running, with a fresh bout of government support for the Hong Kong stock market producing a gain of nearly 6 per cent in the Hang Seng index. Tokyo rose more than 2 per cent. Leading UK stocks took some time to get into their stride because of some disappointment that no more bids appeared, but gradually began to advance. Footsie topped 5,700 in mid-morning and consolidated those gains over lunch.

News of a stronger-than-expected increase in retail sales in July - they rose 0.9 per cent compared with a consensus of 0.4 per cent - acted as a brake on the gilts market, but did little to hinder equities.

Although unable to match the power of the advance by the Footsie constituents, the second and third-line stocks made good progress.

The FTSE 250 index moved up 8.9 to 5168.1, helped along by excellent performances from computer/software stocks such as Sage Group, Logica, Sema and FI Group, all of which responded to excellent results from Micro Focus. Misys was the best performer in Footsie for much of the morning for the same reason.

Small-cap stocks, which have been left for dead by the rally in the leaders, fared much better, the FTSE SmallCap index nudging up 7.2 to 2.326.9.