The FTSE 100 index raced through the 5,300 level for the first time since the middle of September. And there were also hefty gains in the FTSE 250 and FTSE SmallCap indices following the Confederation of British Industry's manufacturing survey for October. Published yesterday, it reinforced views that another cut in interest rates will follow next week's meeting of the Bank of England's monetary policy committee (MPC).
Sentiment was boosted further by a sharp decline in sterling, which saw the Bank of England's exchange rate index drop below the 100 mark to finish the day a net 0.4 off at 99.8, having fallen to 99.6 at one point. That move provided a substantial fillip to the exporters and engineering stocks, which featured at the top end of all the FTSE indices.
The FTSE 100 finished a day of strong gains across the board with a 99.7 rise at 5,331.7, a move which brought the market's rally from October 5th, the lowest level for the index this year, to 682.5 or 14.7 per cent.
At its best, in mid-afternoon, the index posted a 140.6 advance at 5,372.1, responding to a strong opening on Wall Street.
However, the latter's pull back took the British market leaders well below their best levels.
But the second liners and smallcaps kicked on strongly and finished at or around the session's best levels. The FTSE 250 jumped 51.9, or 1.1 per cent, to 4,715.7, up 464.5 or 10.9 per cent from its October 8th closing low for the year. Even more impressive was the 11th straight gain in the FTSE SmallCap, which settled 16.4 or 0.8 per cent ahead on the day at 1,970.0. That index is up 7.4 per cent from its year's low.
Market-makers, still suffering from being caught out by Monday's sudden surge, remained perplexed at the extent of yesterday's sharp rise.
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