THE 25 basis points rise in British interest rates after the first meeting of the monetary policy committee came as no surprise to a stock market that had already positioned itself for such a move.
On the contrary, the news was greeted with no more than a momentary dip by the FTSE 100 index, which bad been trading up 31.4 immediately before the change was reported. In the first minute or two after the news, a handful of share prices eased a shade.
What did surprise markets, both here and in the US, was the much lower than expected increase in the non farm payroll report for May, which electrified Wall Street. The Dow Jones Industrial Average rose almost 100 points not long after London closed.
The creation of 138,000 new jobs in the US was below consensus forecasts and was said by traders to have dispelled some of the expectations of a rate rise in the US when the Open Market Committee, the Federal Reserve's policy making body, meets on July 2nd.
London had already been boosted by a strong burst of buying interest, triggered by the emergence of a fresh round of takeover speculation, notably in the banks.
The FTSE 100 index finished a drama filled day, at the session high of 4,645.0, up 68.8 or 1.5 per cent.
There was mild disappointment across London's dealing rooms that the scintillating performance in the leaders did not spill over into the second liners and smaller stocks.
