US treasuries came to the rescue of a British equity market seen by many observers as on the brink of breaking down below its previous trading range of 3,650 to 3,850 on the FTSE.
The upward momentum in bonds came from a much better feeling about the next US Federal Open Market Committee meeting, scheduled to start on Tuesday. Recent worries that the Fed might raise US interest rates at the meeting faded yesterday as bond prices continued to gain ground.
Gilts drew strength from treasuries, ended a busy trading session up more than three quarters of a point and prompted a sustained rally in equities.
At the end of a relatively busy session, the FTSE 100 closed 32.2 higher at 3,711.0. Second liners underperformed the leaders but also managed to record widespread gains, driving the FTSE Mid 250 index 12.3 ahead to 4,353.2.
Over a week badly affected by numerous sporting distractions, the FTSE 100 had threatened to slide beneath its previous trading range partly because of lack of interest shown by fund managers and partly because of the threat of a rise in US interest rates.
Yesterday's big rally reduced the fall in the FTSE 100 over the five days to only 11.3. The Mid 250 index, on the other hand, has fallen 87.5, or 2 per cent
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