A BURST of takeover speculation in the drugs sector rounded off a positive, if slightly tense, session for British stocks yesterday.
A buoyant performance during the morning and early afternoon was only slightly dented by a weak opening by Wall Street, where the Dow Jones Industrial Average fell heavily in the wake of IBM's fourth quarter results, wiping 75 points off the Dow shortly after the opening.
All the main FTSE indices bar the SmallCap, powered ahead to new peaks at some stage of the day, spurred on by another set of weak retail sales figures for December.
These, along with evidence provided by the latest Confederation of British Industry and British Retail Consortium surveys, were said by market observers to have almost eliminated the possibility of a British interest rate rise following the next scheduled monetary policy meeting between Mr Kenneth Clarke, the Chancellor of the Exchequer, and Mr Eddie George, the governor of the Bank of England, on February 5th.
Coming on top of a runaway performance by Wall Street overnight, where the Dow shot up another 40 points to finish at a closing record, shares built confidently on the previous day's late rally.
The FTSE 100 index ended a hectic trading session 23.6 up at a record closing level of 4,219.1, having reached an intra day peak of 4,227.5 not long after the retail sales numbers were published.
A similarly strong performance came from the FTSE 250 index which ended at a record close of 4,587.0, up 16.9. It hit an intraday peak of 4,590.1 around midday.
With the big investing institutions concentrating their firepower on the top 350 shares, the SmallCap was left behind, but still managed a 3.2 gain at 2,285.6. That left the index only 2.3 off its all time intra day and closing peak of 2,287.9, reached last week.
Wall Street's strong gains on Tuesday reflected relief at the testimony delivered to the Senate budget committee by Mr Alan Greenspan, chairman of the US Federal Reserve.
Turnover at 6 p.m. reached an encouraging 1.01 billion shares. That figure was substantially boosted by a series of programme trades, including one sizeable programme weighted heavily on the buy side. Dealers said that volatility in British equities in recent months had made it extremely difficult for the big institutions to deal quickly in exceptionally large sizes, and that they preferred to shift assets via programme trades.
Fund management groups featured among the best performing sectors after a report that Dresdner Bank is looking to buy a British fund management group,
