A burst of optimism about domestic interest rates and a strong performance from the market's biggest stock, Vodafone AirTouch, helped the FTSE 100 index end the week on a distinctly upbeat note, 148.1 higher at 6,327.4.
The main economic news was the first-quarter gross domestic product figure, which showed a rise of just 0.4 per cent. That was lower than expected and lower than the assumed trend rate of growth for the British economy.
That could release the pressure on the Bank of England's monetary policy committee to raise interest rates when it meets next week, although most economists are still expecting a quarter-point increase.
Sentiment was initially given a lift by Wall Street's rebound late in Thursday's session as investors shrugged off stronger-than-expected inflation data. The Nasdaq, down 100 points early on Thursday, ended more than 200 ahead.
That helped the volatile technology stocks to achieve another rally, more than reversing Thursday's losses. The Techmark 100 index ended 160.8 higher at 3,671.99. There were big gains for Baltimore and ARM, two FTSE 100 constituents, and a rally for Durlacher in the FTSE 250.
The new economy/old economy battle continues to be the subject of much debate among analysts and investors. "Talk of hard landings will mean that cyclicals will remain under pressure," says the strategy team at Warburg Dillon Read. "Indeed, we retain our bias within the value universe towards defensive value rather than cyclical value. Meanwhile our no boom/no bust approach keeps us focused on growth which, like it or not, remains concentrated in the TMT, technology, media and telecoms area of the market."
One telecom stock to attract investors yesterday was Vodafone AirTouch. The market's largest stock shook off the recent worries over the cost of the new mobile phone licence and the AT&T Cellular float in the US to rise more than 5 per cent.
That gain was worth around 50 points on the FTSE 100 and helped the blue-chip benchmark shrug off a weak opening on Wall Street, which saw the Dow Jones Industrial Average drop more than 100 points by the London close.
Without the help of Vodafone, the smaller-cap indices did less well than the FTSE 100. The FTSE 250 gained 40.6 to 6,194.6 and the SmallCap 17 to 3,172.2. Over the shortened week as a whole, the Techmark 100 was up 3.7 per cent, the SmallCap 1.7 per cent, the FTSE 250 1.3 per cent and the FTSE 100 1.4 per cent.
Volume was subdued ahead of the holiday weekend, with 1.53 billion shares traded by the 6 p.m. count. Vodafone was the only stock to trade more than 100 million shares.
