London's equity market built on its good start to the last full trading week before the Christmas holiday break.
All the main indices pushed ahead in response to Wall Street's overnight strength, which showed the Dow Jones Industrial Average up 80 points, having showed a three figure gain at one stage, and the Nasdaq up 34 points.
There was renewed strength in US markets at the outset of trading yesterday, with the Dow and the Nasdaq moving closer to the psychologically important 10,000 and 2,000 levels.
The Dow ran up to within four points of the 10,000 mark during the first hour of US trading, only to fall back. It was up about 50 points as London closed. The Nasdaq penetrated the 2,000 mark before slipping below that level. "If they get back through and hold those levels, we should be able to manage a good finish to the week," said one UK marketmaker. But he warned that any downturn in turnover at the week's close could bring increased volatility.
The dual expiries of index options and the December futures contract on Friday morning are expected to bring a bout of added excitement and volatility to the market.
The FTSE 100 finished the session well off its best but still managed to post a 14.8 gain at 5,151.1, extending its rise in the past two days to 90.1, or 1.8 per cent. It was a much more sedate performance than those of the more junior indices.
The bank sector continued to provide substantial support for the 100 index, still responding to Monday's highly encouraging trading update from Royal Bank of Scotland and hopes of a watered-down Competition Commission report into small business banking.
On the other hand, there was downwards pressure on the insurance sector in the wake of the profits warning announced by Axa, the French insurance giant.
The media sector was another area in focus and provided the FTSE 100 with some of its best and worst individual performers.
WPP was at the top of the winners list, responding to hopes of more consolidation in global advertising.
On the downside, however, was Pearson, owners of the Financial Times, whose shares came under pressure following a trading update. Turnover in equities was 2.07 billion shares.
