LONDON REPORT: It was a hard-fought battle during the early part of the day but London's long-suffering bulls eventually emerged triumphant over the still-ravenous bears yesterday.
FTSE 250: 4,871.6 (+47.1); FTSE SmallCap: 2,099.4 (+11.6)
The FTSE 100 enjoyed the luxury of a second successive rise - a very impressive one at that - moving well clear of the psychologically precious 4,000 level. At the close of a session that saw turnover of 3.8 billion shares, the highest daily volume since September 21st, the FTSE 100 was up 168.7, or 4.2 per cent, having recrossed the 4,200 level at its best of the day.
The expiry of individual stock options also played a part in driving the market ahead. Volumes in the FTSE futures due to expire in September, although remaining exceptionally high, did not match Tuesday's figure. That was taken by traders as possibly indicating that much of the recent extreme volatility in the market could have passed its peak.
And there were suggestions in the market that much of the weakness and general turbulence in recent sessions was attributable to life assurers attempting to renew derivatives contracts, originally put in place last September, which had expired.
The FTSE 100, under the cosh during the first few minutes of the trading session when the index slipped back below the 4,000 mark, began to gather itself and subsequently drove forwards, accelerating over the lunchtime period and finishing the day amid a blaze of strong gains.
The other main indices were never as convincing but also finished the day in good heart. But while the optimists had their way with the benchmark index and the much-followed All-Share index, the market's second and third liners, represented by the FTSE 250 and FTSE SmallCap indices, continued to take serious punishment before following the leaders higher during the afternoon session.
Marketmakers, harassed by the endless waves of selling during recent trading sessions, made sure the bears who had shorted the market had to pay dearly to close open positions that became increasingly obvious as the day wore on.
The day's domestic economic news, including the minutes of the July meeting of the Bank of England's monetary policy committee, and unemployment and average earnings data, was seen as mostly supportive of the market.
- (Financial Times Service)
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