THE London market resumed its winning ways yesterday, after two sessions of modest losses, and the FTSE 100 index closed within 1 per cent of its all-time high.
Footsie rose 20.1 points to end the day at 3,823.4, its highest level for nearly four months. The all-time closing high of 3,857. was recorded on April 19th.
The strong performance of the British market was striking, given Wall Street's weakness. The Dow Jones Industrial Average was around 28 points lower at the close of London trading, after higher-than-expected figures for consumer prices and retail sales depressed Treasury bonds and revived fears that the US Federal Reserve might raise interest rates.
Mr Robert Buckland, UK equity strategist at HSBC James Capel said: "We're starting to catch up some of the daylight between ourselves and Wall Street. The mere fact that we've been left behind in the first part of the year allows us to outperform.
. We've seen a pretty healthy raft of results, particularly from the financials. The focus is back on the big stocks which are leading the way. The number that most people will be looking for the market to have a crack at is 3 850".
However, Mr Buckland, whose end-year forecast for Footsie is 4,000, warned that, with the market at current levels, there is less for investors to go for than there was just two or three weeks ago.
Yesterday's strength in London may have owed something to some lingering optimism about a cut in British interest rates following weak producer prices figures on Monday.
The benchmark 10-year gilt was around an eighth of a point higher, despite the weakness of the Treasury bond market. However, short sterling futures, the market's vehicle for speculating on interest rate changes, continue to point to a rate rise by March 1997.
Corporate news was not particularly supportive for the market yesterday. The regulatory review of National Grid was as tough as had been feared in the weekend press. and the shares were Footsie's worst performers on the day. Third quarter numbers from BOC were bottom-of-the-range and were accompanied by a cautious statement; together, they sent the shares down 4.7 per cent.
However, Footsie stayed strong throughout the day, although it traded within a narrow range; its worst level of the day, 3,811.8, and its best, 3.826.4, occurred within 70 minutes of each other. The FTSE Mid-250 index rose 14 to 4346.1.
The recent rally has seen advancing stocks outpace declining ones by three-to-two over the 10 days to Monday.
Volume showed a pick up from Monday's levels, with 688 million shares traded by the 6 p.m. count, of which 55 per cent was in non-Footsie stocks. The value of retail business on Monday, normally the quietest day of the week, only just edged past the £1 billion mark.
