Hopes that US inflation might not be the problem everyone thought provided London with the impetus it needed to resume its June rally yesterday. The Footsie turned its back on the international scenario and looked instead to Thursday's rate cut, which had taken the cost of borrowing down to 5 per cent, its lowest level for 22 years.
FTSE 100 closed 81.4 up at 6,484.8. The second-line indices were also stronger. The FTSE 250 rose 20.5 to 5,817.5 and the Smallcap 6.1 to 2,608.
Yesterday's rally was not backed by frenetic trading. Final turnover came in at only 970 million shares yesterday and almost 10 per cent of the day's volume represented one stock - British Steel. For the first three days of the week, volume also failed to reach 1 billion, which is seen as a minimum benchmark.
The British market certainly had no problem with the latest producer prices and retail sales figures from the US. They came in up 0.1 per cent and 1.0 per cent and in line with most economists' forecasts. And it is hoped that they might be hinting at a benign inflation figure from the latest US consumer price index data next Wednesday. But the main hurdle is the next rate-setting meeting of the Fed at the end of the month.
