A call for a one percentage point cut in UK interest rates by the Lex column in the Financial Times brought a powerful response from London's stock market yesterday.

The call came ahead of today's meeting of the Bank of England's monetary policy committee to determine interest rate policy.

"The market got itself very excited at the prospect of a cut of that size. There are now plenty of people who think such a move is now a viable prospect," said one market-maker.

"If that is the case then I think the market will run on very strongly."

He added: "The minimum, 25 basis points, is already in the market, and there are plenty who reckon 50 or 75 basis points is on the cards." But he warned that any decision to leave rates unchanged would not be well received by the market.

It was not simply the rate talk that was behind London's good showing. The Dow Jones Industrial Aver age made good progress on Monday, finishing well clear of the 9,000 level and Wall Street gave a relatively resilient performance again at the opening yesterday.

Another bull point for London was strong buying of Zeneca just before the close, amid renewed rumours that merger plans are imminent for the UK drugs group, with Astra, the Swedish group, in the frame.

The take-over rumours were not confined to Zeneca. Hints of more corporate activity have been one of the stock market's main drivers in recent weeks, complementing the bullish interest rate story.

At the close, the FTSE 100 index had regained the 5,600 level, finishing 39.0 ahead at 5,615.7.

The FTSE 250 struggled for most of the day but eventually settled with a 4.2 gain at 4,757.7.