Bid speculation helps index to high

HOPES that an expected increased offer for Forte, the hotels and leisure group, from Granada may be the first of a fresh series of big bids in Britain helped drive the main market indices to all-time closing highs yesterday.

The bid speculation, coupled with increasing optimism that a settlement of the long drawn out US budget impasse may be imminent, saw the FTSE 100 index end the session a net 16.1 higher at 3,720.6 and the FTSE Actuaries All-Share index hit a record 1,821.21, up 6.82.

The market's concentration on the leaders meant that the second line stocks were slightly less impressive, although the FTSE Mid250 still managed a rise of 8.9 at 4,080.1; the Mid index is still almost 73 points short of its all-time high - 4,152.8 - recorded in February 1994.

London's performance impressed many of the leading market makers. One said the market had expected a much sharper decline in shares last Friday and today, but had been wrong-footed by the resilience of Wall Street, where the Dow Jones Industrial Average had performed much better than expected.

The US continued to provide much of the ammunition for the British market, with the Dow rising seven points on Friday and opening strongly when trading finally got under way in a blizzard-affected New York.

Shortly after trading began yesterday, the Dow jumped 25 points, before slipping back to show a seven point gain and then rallying again to display a 12 point advance two hours into the session.

Snow storms across the eastern US saw crude oil prices race ahead to their highest levels for around three years and fuelled good gains across the oil sector.

Enterprise led the oil pack, helped by a forecast upgrade from one of the market's leading broking houses, while there were impressive performances from BP and Shell, as well as all the smaller exploration stocks. The latter have been boosted by the takeover activity in the sector in the past few months.

Opening around four points higher, Footsie quickly got into its stride in the wake of the big rises in oils and following a number of good individual performances in the leaders.

The cash market was also being persistently led higher by the future, which attracted keen interest throughout the day.

At the day's best, the index came within 0.2 of its intra-day record of 3,723.0, reached last week.

Turnover in equities was disappointing by recent standards, especially since yesterday was the first trading session since the Christmas/New Year break to see the City's trading desks at full strength.