Footsie falters but finishes on a high

The FTSE 100 index surged ahead to a new intra-day record yesterday, and finished on a record high, although it had fallen back slightly by the close. The flurry of buying interest came as London continued to respond to the better outlook for domestic interest rates and followed a series of takeover moves, with no less than six bid stories emerging during the day.

The bid news ranged across the breadth of the market. In the FTSE 100, Energy Group shares shot ahead after news that Nomura, the Japanese broking house, had entered the bid fray, joining Pacifi-Corp and Texas Utilities of the US.

And among the FTSE SmallCap constituents Henderson, the fund management group, said it was involved in talks that could lead to a bid.

The fund management sector has been rife with talk of more takeovers ever since Merrill Lynch, the US securities house, paid in excess of £3 billion sterling to acquire Mercury Asset Management at the end of last year.

Still in the SmallCap index, GGT, the advertising agency whose shares plummeted last week after it lost an important account, attracted an agreed £200 million offer from Omnicom. Bids or potential bids also emerged at Benson's Crisps, B. Elliott, the engineering group and Ronson.

The FTSE 100 index finished the day 46.3 higher at 5,372.6, above its previous closing and intra-day peaks of 5,330.8 and 5,367.8 respectively.

At its best, the index topped the 5,400 level, reaching a new intra-day record of 5,415.3, up 89.0, not long before the opening of Wall Street.

The latter pushed up in excess of 60 points not long after the opening bell, building confidently on its overnight three-figure gain, posted as President Clinton hit back against his critics.

Gains in the leaders carried over into the second liners and smallcap stocks.

The FTSE 250 ended the session 29.9 ahead at 4,819.1, not far from a session best of 4,820.6, while the FTSE SmallCap moved up 4.2 to a day's best of 2,360.7.

Although sharply higher yesterday, the FTSE 250 is still 144.7, or 2.9 per cent, below its previous closing and intra-day peak of 4,963.8. The FTSE SmallCap is 46.7, or 1.9 per cent, off its intra-day record. Both highs were hit in October 1997.

London overcame a momentary worry over the gilts auction, where the level of cover, 1.25 times, was viewed as disappointing, and lingering concerns about the impact of the collapse of Asian markets.

The Asian story reared its head again yesterday with Marks & Spencer shares burdened by a 23 per cent slide in sales in the Asian region, following the post-autumn weakness in currencies and markets.

Dealers, shocked by the extent of London's advance this week - the FTSE 100 is up no less than 3.7 per cent - warned that the market is due a dose of profit-taking before the end of the week.

Turnover in equities at 6 p.m. was 874.5 million.