TMT stocks keep City dealers in positive form

A fresh burst of support for the market's current "darlings", the so-called TMT stocks, encompassing the technology, media and telecoms sectors, plus a further rebound in pharmaceuticals, helped the FTSE 100 index to continue its advance yesterday.

And the blue-chip index was not alone in continuing its recovery from a midweek wobble, which was triggered by a steep decline on Wall Street after one of the Dow Jones Industrial Average's constituents, Procter & Gamble, issued a profits warning.

Wall Street also survived a double blast from two of the most influential figures in the US, Mr Alan Greenspan, chairman of the US Federal Reserve, and Mr Arthur Levitt, chairman of the US Securities and Exchange Commission. Mr Greenspan continued to remind markets that the US economy is overheating while Mr Levitt spoke of the "casino mentality" on Wall Street, a reference to the massive valuations put on Internet/high-tech stocks.

The junior FTSE indices kept up with the blue-chip benchmark, with the SmallCap spiralling to more intra-day and closing records, although the 250 index, despite posting a decent gain, missed out on both counts.

The FTSE 100 closed 36.6 higher at 6,568.7, well off its best of the day, which had seen the index drive through the 6,600 level to hit 6,642,5, up 110.0 about an hour after trading commenced. The closing gain left the 100 index up 81.2, or 1.3 per cent, over the week. The 250 index settled 27.3 firmer at 6,824, after a session high of 6,852.8, for a five-day gain of 47.8, or 0.7 per cent.

But the star of the show was the Smallcap, which raced up another 30.7 to an intra-day and closing record of 3,565.7. That performance extended the rise on the week to 84.56, or 1.3 per cent.

British market strategists at Paribas remained strong supporters of the London market and said a close scrutiny of the recent Bank of England inflation report had indicated that British rates are at, or close to, their cyclical peak.

Wall Street was the principal catalyst for yesterday's surge, kickstarting London in the wake of the 154-point gain in the Dow, which took the average back above the 10,000 mark, and the 149-point, or 3 per cent, gain in the Nasdaq composite.

Those US markets could not maintain their momentum yesterday, however, as early strong gains ran out of steam to be replaced by relatively minor falls shortly after London closed for the day.

Turnover in equities reached 2.07 billion shares, with Vodafone AirTouch accounting for 210 million shares or 10 per cent of the total.