After a morning of to-ing and fro-ing, when London's equity market was suffering from a bout of telecoms indigestion, there was a gradual recovery of sentiment in UK stocks. The improved trend came after Wall Street repeated a good showing on Friday and continued yesterday, when the Dow Jones Industrial Average pushed up over 90 points.
Those good performances came ahead of the decision of the US Federal Reserve's open market committee which met yesterday to debate and decide US interest rate policy.
All the indicators from global markets pointed to the Fed leaving rates on hold, although there remained some nagging concerns with some dealers that Mr Alan Greenspan, chairman of the Fed, might take the last opportunity ahead of the November presidential elections to tighten policy in a pre-emptive move. And there were plenty of commentators taking the view that the Fed could leave rates on hold but remind markets that its next move would probably be upwards.
London dealers mostly adopted the view that markets would be content with a US no-change policy allied with a continuing tightening view.
Rather surprisingly, the general view was that a 25 basis points increase would not cause too many problems to the market. On the contrary, as one dealer put it, such a move would be viewed as positive in that the markets would applaud such a hawkish view.
Having dipped 21 points early in the session, as market-makers took pre-emptive action, the FTSE 100 thereafter maintained a positive stance, eventually finishing a much busier-than-expected session a net 42.6 higher at 6,584.8. At its best, the 100 index moved through the 6,600 level, reaching 6,605.2, encouraging the market bulls who have been promoting the theory that an expected pre-year-end upside thrust might well take place much earlier this year.
But while the 100 index performed strongly all day, the second tier market, represented by the FTSE 250, had a wretched time of it. The 250 struggled all day and closed 16.7 off at 6,886.9, its worst of the session.
And the FTSE SmallCap index had a less than illustrious day, although it only dipped into negative territory for a brief period in midmorning. It closed 1.3 firmer at 3,456.9.
Much of the initial and subsequent market activity was concentrated in the market's heavyweights which play such an important part in the FTSE 100.
The banks sector gave a big boost to the leading index. Also helping bolster the index were the oil majors, BP Amoco and Shell, which responded to latest positive news on crude oil prices.
Turnover in equities was 1.79 billion shares, boosted by the 319 million shares traded in Vodafone and a substantial buy programme.
