The stock market regained some of its recently lost poise yesterday, recovering well from last week's sell-off which saw the FTSE 100 in full retreat on each of the four trading days.
Behind the rally in share prices was real and rumoured take-over news, plus the impetus of Friday's performance by Wall Street, where the Dow Jones Industrial Average rose around 85 points to a record close.
Asian markets also provided a boost to sentiment, led by Hong Kong where the Hang Seng index moved up more than 1 per cent. But flurries of profit-taking and a disappointing performance from New York at the opening of US trading yesterday ensured the FTSE 100 finished the session well off its best. The Dow never looked comfortable during European trading hours yesterday, sliding from the outset and posting a 35-point decline not long after London closed for the day.
At the close the FTSE 100 was left with a 31.9 gain at 5,954.1, well short of the day's best, which saw the index race back towards the 6,000 mark, only to falter at 5,993.2.
The second-liners and small-caps delivered solid performances. The former, the FTSE 250, climbed 7.7 to 5,526.9, compared with a session high of 5,530.7 and only 31.5 away from its all-time closing high of 5,558.4 reached at the start of the month.
The FTSE Small-Cap, edged up 3.4 to 2,627.1 and is now only 13 points away from its record close.
A UK public sector borrowing requirement of £7.2 billion in March was well below the consensus forecast of £8 billion and encouraged sentiment in both gilts and equities at the start of a big week for economic news.
The actual take-over news concerned Courtaulds, where Akzo, the Dutch group, launched an agreed £1.83 billion offer for the UK company. Courtaulds shares edged above the 450p a share Akzo bid price at one point, leading some market observers to speculate on the potential for a counter bidder or bidders to move in.
Dealers insisted there was more take-over action in the pipeline in the short term, with the utilities arena attracting plenty of support in the wake of the government's go-ahead last Friday for the Texas Utilities bid for the Energy Group.
Market-makers are bracing themselves for a busy week as a series of important statistics are unveiled. This morning brings inflation data, while tomorrow there is the unemployment report, earnings details and M4 lending.
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