The UK market took off again yesterday, jumping another 2.5 per cent after more encouraging corporate figures around the world.

The FTSE 100 responded to higher-than-expected numbers from IBM in the US overnight and from Nokia in Finland yesterday, and dealers returned to the buy tack, pushing the main index up 113 to 4,170.7 by the end of the session. At that level the index had leapt more than 15 per cent from its intra-day low three weeks ago and strategists were beginning to see a groundswell of confidence that could take the London market into a new trading range.

"It would not surprise me if we could claw our way back to the 4,400-4,500 level," said Mr Mike Lenhoff, strategist at Brewin Dolphin. "Over the past three weeks, there has been a shift from defensives to more cyclical areas and the corporate numbers have not been bad. Also, the market has been oversold and we are heading to the time of the year when we have strong seasonal effects."

It certainly seemed that the market was keen yesterday to gloss over disappointing news and concentrate on the good. It ignored the 70 per cent fall in the share price of MyTravel after the holiday group announced its third profit warning in less than six months.

And the Dow Jones Industrial Average was showing a 200-point gain shortly after London closed for the day despite gloomy findings from the latest Philadelphia Federal Reserve survey.

Mr Lenhoff argues that if London holds above the 4,400/4,500 level, some real money could start to move back into the market and away from bonds. However, other strategists see a "buffer zone" starting to emerge and one derivatives trader said that options volatility which had been unusually high recently had started to drop away because market-makers believed the market was flattening out. On the other hand, the Liffe futures market experienced record turnover across its range of products yesterday with traded options volume rising above 200,000 and activity in Euribor bond futures soaring on hopes of imminent European interest rate cuts.

Overall equity turnover hit 3.5 billion shares, one of the highest volumes of the past year. It was an indication that the rise reflected more than just a squeeze by hedge funds and that there was some genuine institutional business behind the rally. - (Financial Times Service)