A BULLISH report from the Confederation of British Industry, a successful gilts auction and relief that supermarket group Tesco was not about to tap the market for a £1 billion sterling rights issue drove London share prices sharply higher yesterday.
Adding to a generally better feeling in the market place was a late rally on Wall Street overnight and a positive opening performance by the Dow Jones Industrial Average at the outset yesterday.
Driven by a combination of those bullish factors, the FTSE 100 index embarked on a strong rally early in the session, eventually recaptured the 3,700 level lost on Monday and finally settled only a fraction below the day's best levels. It ended 27.1 higher at 3,708.4.
Demand for the market's second-liners was much more restrained, despite a handful of excellent individual performances, from stocks like Mersey Docks, Carpetright, Caradon and Medeva.
Television companies HTV and Scottish TV were said to have been largely responsible for the lack of performance by the FTSE Mid 250 Index, which closed only 5.9 ahead at 4,236.9.
The television stocks were thought to have been affected by switching into BSkyB, which topped the FTSE 100 individual performance league with a gain of almost 3 per cent.
Dealers in London remained cautious about the market's performance, however, pointing once again to the relatively low levels of genuine customer business in the market and the continuing nervousness surrounding the US stock market.
It was poor results from Motorola and a profits warning from Hewlett Packard, both highly rated technology stocks, that were seen to trigger the recent sell off in the US and which upset global stock markets.
Tesco's reluctance to pay top dollar for Docks de France, the French supermarket group, brought widespread relief to a market fearing a £1 billion plus rights issue.
This catapulted Tesco shares to second position in the Footsie table, only just ahead of British Steel, whose shares were aggressively bought ahead of today's annual meeting.
A batch of new entrants to the market was highlighted by the splendid debut of Allied Carpets, whose shares, initially placed at 215p, raced up to near 10 per cent premium. There was no such good fortune for biotech stock Therapeutic Antibodies whose shares, placed at 525p, slipped below 500p before closing at 509p.
Turnover in equities at 6 p.m. was 605.7 million. Retail business on Monday was worth £1.3 billion.
