Wall Street gives the City a lift


Shares built strongly on Monday's surge, delivering a ready response to a further round of confidence-boosting performances from overseas markets. Once again it was Wall Street that provided the initial impetus for global markets. The Dow Jones Industrial Average moved up 189 points - its fourth biggest ever rise in points terms - passing the 8,000 level in the process.

At its best, the Dow was more than 225 points ahead.

More good news for European markets came from Hong Kong where the Hang Seng index posted a 4.3 per cent rise, more than offsetting a relatively modest fall in Tokyo and another dip by the Seoul market.

The FTSE 100 index finished a relatively brisk trading day 55.8 higher at 4,977.6, having hit a session high of 4,980.1 as Wall Street rallied from a slightly uneven opening to post a near-20 point gain early yesterday.

Over the past two sessions Footsie has rallied 145.8 or 3 per cent, a rise fuelled mainly by the exceptional strength of Wall Street and a strong recommendation for UK stocks from Merrill Lynch, the US broker.

The other FTSE indices continued to lag the 100 index, however, with the FTSE 250 only able to muster a 10.8 improvement at 4,668.4 and the FTSE SmallCap up 1.9 at 2,275.0.

Apart from the overall strength in the leaders, the trading session was highlighted by numerous individual features, including the much-heralded sale of National Westminster Bank's loss-making equities and derivatives divisions, which make up NatWest Markets.

There was more takeover activity yesterday, with Merrydown, the cider and alcopops maker, accompanying its lapse into losses in the half-year with news that it had received a takeover approach.

Other takeover stories circulating in the market included Hambros, one of the few remaining UK merchant banks and BICC, the heavy electrical and engineering group.

The financial areas of the market were alive with talk of "the race for mergers", a race which was said by dealers to have been set in motion by NatWest's release from its investment banking ambitions.

Friday brings the US non-farm payroll report for November, always a key factor in whether the US Federal Reserve changes interest rates. The Fed's open market committee is scheduled to meet on December 16th.