Sluggish Dow stops Footsie surge

THE British equity market, as expected, zipped to a new all time intra-day high yesterday, but the party was spoiled by a sluggish opening on Wall Street.

The latter, the prime motivation behind the early upsurge in British share prices, opened on an uncertain note yesterday and the Dow Jones Industrial Average showed a 20 point plus fall shortly after London closed for the day.

But the FTSE 100 index hung on grimly during a disappointing afternoon session and emerged with a modest but welcome 5.3 gain at 3,916.1, failing by only 2.6 to record a new closing high.

There was better news for the second liners, where the FTSE Mid-250 pushed up 13.9 to 4,438.4. The Mid index is now 130.2 snort of its all time high, reached in April this year.

The FTSE Small Cap index moved up 4.6, leaving it around 70 points off its June record level.

Dealers said there was widespread disappointment with London's performance during the latter part of the session but insisted there was a strong under tone to British stocks throughout the day.

It only needs Wall Street to deliver a reasonable performance and we'll see London push on from here," said one senior trader.

There remained a buzz of excitement around the City's trading desks about the possibility of more takeover activity in British stocks, with some expecting another bid this morning.

There were no big gains in the insurance sectors, apart from Refuge and United Friendly, which made rapid progress amid hints that the bid terms will be sweetened. But there were persistent rumours that another bid was being lined up in the sector.

London & Manchester, frequently seen as a potential takeover target in life assurances and Guardian Royal Exchange, were being touted as strong bid candidates, while another story in the market was that an overseas predator was stalking Legal & General.

London began the day in good heart, with the FTSE 100 up over 18 points at the outset and reaching a record intra day high of 3,933.6 in mid morning before slipping back as downside pressure developed in futures.

The early momentum came from the Dow's overnight surge which took it up to within 45 points of its all time high, and from the good news on producer and output prices, announced on Monday.

Sentiment was also lifted by the bullish news on high street sales published by the British Retail Consortium.

Barclays jumped on talk of an imminent broker buy circular.

On the sell side, Thorn was unsettled by fears that the shares may be removed from the FTSE 100 list at the next meeting of the Footsie steering committee.

Turnover at 6 p.m. was 728.9 million shares. Retail business on Monday was worth £1.56 billion sterling.