The feelgood factor, lost so dramatically in mid-week, returned to London's equity market yesterday, with all sectors extending the recovery which started late on Thursday afternoon.
The first signs of a recovery came on Thursday with news that the British monetary policy committee had left interest rates on hold; a feeling that the committee would lift rates had gathered momentum early in the week, especially in view of the strong survey of the service industry.
The extent of the market's strength yesterday came as a surprise to many observers, who had expected fresh falls after the latest bad news from the US high-tech sector. Motorola followed Intel in warning that its first-quarter earnings would be well below current market expectations.
Banks and pharmaceutical shares, which have been in the vanguard of the London market's advance over the past few years, were back in vogue, the latter amid a revival of takeover hopes and the former after a severe midweek setback in the sector.
The FTSE 100 index eventually ended the day 87.3 higher at 5,782.9, having taken a dash at the 5,800 level in mid-afternoon to reach a session high of 5,791.8. Second-liners were catapulted higher by the return of confidence in the leaders, plus the prospect of more bids. The FTSE SmallCap moved up 8.0 to a record intraday and closing level of 2,490.1. Turnover at 6 p.m. reached 955.1 million shares, of which just over half was in non-Footsie stocks.
