Another burst of interest rate optimism, mixed with excellent news from overseas, saw the FTSE 100, London's benchmark index, drive almost effortlessly through the 5,600 level yesterday.

Footsie finished an extremely busy trading session 119.0 firmer at 5,622.9, having touched a day's high of 5,645.1 in mid-afternoon.

That performance took the index rise from its October 5th closing low for the year, 4,648.7, to an astonishing 974.2 points or 21 per cent.

And the good news for investors was that the gains extended right across the market. The two junior indices, the FTSE 250 and SmallCap, joined in the party with the latter continuing its record-breaking sequence of upside performances to a remarkable 18th consecutive trading session. The SmallCap settled 18.6 up at 2,066.6, while the FTSE 250 ran up a 59.7 gain at 4,871.4, having reached a day's best of 4,975.3.

Dealers said the big market-making firms had once again been caught out by the pace and power of the latest surge. "There has been an almighty squeeze in the market for some time and it is causing big problems for market-makers who have to lift prices to encourage any sellers. There is a lot of pain about," said one market-maker.

He warned that any disappointment on the interest rate front today would bring a sharp reaction in prices.

This morning brings the Bank of England's monetary policy committee's decision on interest rates. The stock market is said to have already priced in a 25 basis points cut and there are many expecting an even bigger cut of 50 basis points.

Turnover in equities continued to nudge higher, eventually topping the one billion shares mark and settling at 1.12 billion, the highest daily total since October 21st.