Another whiff of speculation about imminent corporate activity saw London's equity market scramble back into positive territory at the close of an erratic trading session.
The late rally confounded many observers and took place against a background of weakness on Wall Street, where the Dow Jones Industrial Average posted a 70-point loss not long after the London close.
Such was the weight of buying interest in London just before the close that the FTSE 100, which was in negative territory up until the last 30 minutes of the session, finished a net 1.9 up at 5,264.4, for its sixth consecutive gain.
Takeover rumours once again alighted on the financial sectors of the market where Bank of Scot- land and Northern Rock, long time bid targets, were big winners.
The insurance sector, buffeted over the past couple of sessions by worries about big losses associated with the recent British storms, was also pinpointed as an area of potential corporate activity.
But a big late gain in Royal & Sun Alliance was attributed to speculation that the group may well emulate fellow insurer Legal & General in buying back its outstanding convertible bond stock.
Earlier, Footsie had come under pressure as some Asian stock markets displayed signs of further distress. Traders in London were also uneasy about Wall Street's performance on Monday where the Dow closed well off its session high.
But dealers emphasised that there had been no real heavy selling pressure. The market's second line and smaller capitalised stocks made strong progress throughout the session.
Both sectors delivered excellent performances, with buyers chasing the stocks on a mixture of takeover hopes and the search for good value.
The FTSE Mid-250 index ended a buoyant session 30.2 higher at 4,858.9 and the FTSE SmallCap was a comfortable 6.8 ahead at 2,335.3.
Strategists pointed out that both indices had under-performed the FTSE 100 over the past month and year. Over the last month, the FTSE 100 gave a total rate of return of 5.6 per cent, compared with the FTSE Mid-250's 3.1 per cent and the FTSE SmallCap's 2.1 per cent.
Over the year, Footsie showed a 23.6 per cent total return, compared with the Mid-250's 10.1 per cent and the SmallCap's 9.1 per cent.
Once again, gilts helped underpin equities, with the market increasingly taking the view that British interest rates will be left on hold after the monetary policy committee meets to determine interest rate policy. The committee's decision will be announced tomorrow. And the market still has to cope with two important economic items from the US later in the week; producer price data and the non-farm payroll report for December.
Turnover at 6 p.m. was 828.9 million shares.
