Determined effort to gain ground despite the low turnoverin equities

London's equity market made a determined attempt yesterday to put the events of the past two weeks well behind it. Strong gains in Far Eastern markets and the US on Friday, and at the outset of trading on Wall Street yesterday, helped to restore some of investors' flagging morale.

At the close of a session marked by the lack of genuine business, the FTSE 100 index re-crossed the 4,900 level lost in such dramatic fashion at the start of last week. It eventually settled 64.1 higher at 4,906.4, having posted a three-figure gain - up 102.3 - at its best of the day.

Although by no means as strong as the leading index, the rest of the market also managed to record good gains. The FTSE 250 ended the session 20.4 ahead at 4,663.6 and the FTSE SmallCap added 8.0 at 2,320.2.

Dealers welcomed what they described as a day of much-needed calm and tranquility.

"The market needs a period of relative stability which would allow investors time to regain their confidence," said one trader who maintained that the underlying tone of the market remains cautious. But he warned of plenty of potential pitfalls in the short term, in the form of further extreme volatility in the Far East, as well as crucial economic news on both sides of the Atlantic.

The UK's monetary policy committee meets tomorrow, with the outcome of its deliberations to be made known at noon on Thursday. Few observers expect the committee to recommend an increase in rates then, but a rise of 25 basis points is expected before the end of the year.

In the US, the non-farm payroll report for October is due on Friday. That may determine whether the US Federal Reserve's Open Market Committee opts to increase interest rates on Wednesday week.

Yesterday's session began well, with institutions said to have been happy to enter keen bids for the leading stocks in the wake of the near 6 per cent rise in Hong Kong.

The 60-point gain in the Dow Jones Industrial Average last Friday was seen as encouraging, given that the Dow was level at the London close.

A rise in the UK purchasing managers' index to 53.7 in October against the previous month's 52.7, and a slightly higher than expected M0 money supply figure, saw gilts under modest downside pressure but caused few problems for equities.

Banking stocks, badly mauled in the market sell-off, were among the day's biggest winners, especially HSBC which recaptured over half of last week's fall.

There was mixed news for the retailers, however, with Marks & Spencer aggressively bought ahead of today's interim report which some expect to include details of a substantial expansion programme. But Next was the worst Footsie performer, amid talk that it might launch a bid for Etam, the fashion retailer.

Turnover in equities at 6 p.m. was a lowly 575 million shares.