In a real roller-coaster session the London market's benchmark index, the FTSE 100, moved in a 200-point range yesterday, sliding away at the start of the session but then gradually strengthening to finish the day on a buoyant note.
There were various reasons for the change in sentiment, but the most powerful driving force was strong performances from the market's biggest stocks, the heavyweight telecoms and the oil majors.
A recently-beleaguered Wall Street also galloped to the rescue, with all the main New York indices staging a strong rally after losing ground for the previous three sessions.
US stocks picked up after some market-friendly economic news, specifically much weaker than expected retail sales for April. That news was being viewed as easing slightly the calls for an aggressive stance on US monetary policy next week when the US Federal Reserve's open market committee meets.
The outcome of the FOMC deliberations will be made known at 7.15 p.m. on Tuesday. A rise in US rates has been on the cards for some time with some observers taking the view that a 50 basis points rise is likely. A small minority are even speculating on the possibility of 75 basis points.
Another reason for the improved feeling in the leaders was the performance of sterling, which fell heavily yesterday, with the Bank of England's Sterling Exchange Rate Index retreating to 107.4 during the morning, before ending the day at 108.3, down 0.7.
The latest fall came as markets continued to ponder the Bank of England's latest quarterly inflation report, published on Wednesday, which was seen as fuelling the view that UK interest rates are close to their peak in the current cycle.
At the finish of the session the FTSE 100 index showed an impressive 145.3 gain at 6,245.9, having been down to 6,051.5 shortly after the market opened. At its best the index was up 163.0 at 6,263.6. But there was no joy for investors in the market's second and third-ranking stocks and many of the TMTs remained under heavy pressure.
The FTSE 250 never looked likely to finish in positive territory, despite embarking on a good rally during the afternoon. The index, heavily loaded with high-tech stocks, settled 14.4 lower at 6,208.2. Similarly the FTSE SmallCap gave up 8.6 to 3,182.6.
Turnover in equities was an uninspiring 1.72 billion shares, a figure boosted substantially by the 250 million traded in Vodafone AirTouch.
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