Tech sector has another of its periodic surges

Interest rate optimism, enthusiasm for technology stocks - even some bid excitement - almost everything went right for the UK…

Interest rate optimism, enthusiasm for technology stocks - even some bid excitement - almost everything went right for the UK stock market yesterday.

The technology sector had another of its periodic surges, with a number of stocks generating double-digit returns on the day.

A return of more than 10 per cent would be a good annual performance from a share portfolio.

Investors in both the US and the UK shrugged off Intel's warning, delivered late on Tuesday, that first-quarter sales would fall by 15 per cent. Investors seemed to have decided that all the bad news was in the price. The Nasdaq Composite showed a triple-digit gain in early trading and the Techmark 100 index of leading UK technology stocks closed 108.6 higher at 2,655.87.

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Investors were also cheered by economic data from the US, which showed that inflationary pressures were subdued and that industrial production was falling. The data were seen as giving a green light for the Federal Reserve to cut interest rates.

And domestically, the market was given a lift by the news that utility PowerGen had received an approach from the German group Eon. PowerGen shares were the best performers in the FTSE 100 index.

All the above helped the FTSE 100 index recover Tuesday's losses and close 114.1 points ahead at 6,197.4. The FTSE 250 was also strong, gaining 69.3 to 6,651.6 while the SmallCap advanced 23.8 to 3,242.2.

Not all the day's news was quite so positive. There was a raft of profit warnings, with catering equipment group Enodis joining retailers Peacock, QS and Brown & Jackson in disappointing investors.

Turnover was busy as it has been for the last two weeks. By the 6 p.m. count, 2.33 billion shares had been traded, with Vodafone and BP most active.