First full day back sees recovery

THE first real full scale trading session since the Christmas and new year holidays saw the FT SE 100 index regain the 4,100 level, which it lost during Wall Street's recent bout of turbulence.

London's recovery came in the wake of Friday's rebound in the US stock market when the Dow Jones Industrial Average recouped all of its midweek three figure loss. And US shares delivered another strong opening performance yesterday, recording a near 60 point rise.

Footsie ended the session only 12 points below its record closing high, finishing a net 17.0 firmer at 4,106.5.

There was even more impetus behind the second line issues where the FT-SE Mid-250 index climbed 23.8 to 4,517.4, closing the gap on its all time high, reached in April, 1996, to 51 points. The SmallCap just failed to clamber over the 2,200 level, ending 10 points up at 2,199.0. The last time the SmallCap closed over 2,200 was on June 26th last year; its all time high was on June 6th.

But it was not a totally pain free session for London stocks. A poor showing by the gilts market unsettled some of the more cautious fund managers who preferred to stay on the sidelines.

Gilts' weakness yesterday reflected the continuing uncertainty surrounding domestic and US interest rates. News that the provisional figure for December MO money supply had risen by a slightly larger than expected 0.7 per cent, or 7.1 per cent on the year, kept up the pressure for another British interest rate rise.

Mr Kenneth Clarke, the chancellor, is scheduled to meet Mr Eddie George, governor of the Bank of England, tomorrow week, to discuss monetary policy. Some market observers said a 25 basis points increase in rates was a distinct possibility with further increases not too far away.

The return to full staffing levels in dealing rooms and at investment management groups was reflected in a significant upturn in trading activity.

At 6 p.m., turnover was 682.5 million shares, well ahead of the recent holiday affected levels. Non FT-SE 100 issues accounted for 66 per cent of the total.

Last Friday saw the value of genuine retail business in the market pick up to reach £674.8 million sterling, the best daily figure during the holiday period.

Although underperforming a rampant Wall Street, which looked set to launch a fresh assault on its all time high of 6,623 after London closed, the British market was in good heart. "It feels as if it wants to keep going up," said a salesman at one big broking house.

However, a senior marketmaker said the big firms were increasingly reluctant to take positions in view of the extreme volatility of Wall Street.

Vodafone and Orange, the cellular telephone groups, were Footsie's top two performers after the latter announced excellent new subscriber numbers; Vodafone's figures were published last week. The property sector had strong performers in Land Securities, MEPC and British Land.