British shares shot to record levels yesterday, set alight by a report that the government will signal its intention to join European economic and monetary union at the earliest opportunity. The report, in the Financial Times, triggered a steep slide in sterling, which fell over six pfennigs against the D-mark at one point, saw gilts surge ahead and post gains of 1 1/2 points and electrified an equity market already on the brink of new highs.
The FTSE 100 index rocketed past 5,200, finishing a day of hectic trading 160.8 or 3.2 per cent higher at 5,226.3, easily a new closing record. Footsie's gain was the largest ever in points terms but well down in the list of best performances in percentage terms.
The FTSE Mid-250, although left gasping in the wake of the scintillating performance of the leading index, finished the day 92.9 or 2 per cent up at a new intra-day and closing high of 4,809.1. The FTSE SmallCap brought up the rear to close 14.2 or 0.6 per cent higher at 2,321.1, still well short of its closing peak.
The FTSE All-Share index jumped 66.4 or 2.8 per cent to a record close of 2,445.86, after hitting an intra-day peak of 2,450.18.
Activity in derivatives added to the market's discomfort, with the steep rise in the future prompting brokers to chase stock in the cash market, which in turn led marketmakers to hoist prices even further as the stock shortage became increasingly evident.
Wall Street, although very much in the background, played a part in the day's events.
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