BRITISH stocks rose strongly yesterday, responding mostly to Wall Street's late upsurge on Tuesday evening, which extended that market's rally to a third successive session, but also to weaker than expected output data. London shrugged off a sluggish start in the US yesterday afternoon, which saw the Dow Jones Industrial Average give way after a steady start.
British industrial production during February fell 0.6 per cent, against expectations of a 0.2 per cent rise. Manufacturing output during the month was up 0.2 per cent, compared with a consensus forecast of up 0.3 per cent.
Economists pointed out, however, that the dip in industrial production was largely due to a fall in oil and gas production and utility output, because of the warm weather.
The stock market's buoyant performance drove the FTSE 100 briefly back through the 4,300 level, although it could not maintain its early pace and later slipped back to finish the day a net 23.0 higher at 4,292.3. The FTSE Mid-250 moved up 20.9 to 4,539.6 and the FTSE SmallCap index 4.5 to 2,290.9.
But it was clear once again that the market's rise took place against a background of sparse retail business. The institutions stubbornly refused to get involved and it was left to the market makers to trade among themselves, mostly attempting to keep level trading books. Turnover at 6 p.m. was a disappointing 699.7 million shares.
Wall Street's overnight closing gain of 53 on the Dow came as a surprise to London traders who had seen the Dow off more than 30 during early trading on Tuesday. That rise extended the Dow's rally to around 130 over the three sessions.
British stocks got their expected early mark up and slowly built on that as the output data were published. News that Labour's lead over the Conservatives had been clipped to 12 points had little impact on sentiment.
However, there were some murmurings that further erosion of Labour's lead might reawaken the market's long held fear of a hung parliament. Such an event is viewed as the worst possible electoral outcome for the stock market, with the threat of months of political uncertainty.
London got slightly choppy during the last hour of business, when Wall Street began to lose heart, but never looked likely to give up its earlier gains.
Talk that Wall Street's rally had run its course for the time being was mostly ignored in London, with chartists pointing to a further 170 points upside on the Dow. A move of that size would see the FTSE 100 approaching 4,400, it was suggested.
Hanson took top place in the FTSE 100, with specialists noting the good results this week from Tarmac, the building materials group, and highlighting Hanson's substantial building materials interests, which encompass the old London Brick business among others.
