THE prospect old a fresh wave of takeover moves, more positive news on the domestic economy, a new inflow of overseas money and another powerful performance by Wall Street saw British equities surge to new all time highs yesterday.
There was also talk that Goldman Sachs, the US in vestment bank, was still carrying out an exceptionally large buy programme. The programme is thought to have been running for at least two days.
The FTSE 100 index, which has been struggling for some time to get through its previous all time high, sailed comfortably through the 3,800 level to settle 34.8 up at a new record 3 825 Over the past three trading sessions the Footsie has risen 81.1 or just over 2 per cent.
Second liners were even more in demand, with the FTSE Mid 250 racing up 41.8 to a peak 4,458.5, its fourth successive record. The FTSE A All Share index hit a record 1,903.18, up 17.87.
Much of yesterday's takeover speculation was focused on the utilities areas of the market, especially on National Power, whose shares rocketed during the afternoon. National Power shares were bid up aggressively after the market closed with senior market makers noting that "the people that bought BET before the Rentokil bid were buying National Power".
"The way the shares moved yesterday and judging by the weight of business in the traded options, I wouldn't back against a bid being launched," said the head of market making at one British broker.
Earlier in the session, the bid spotlight was squarely on the water sector where talk of an imminent bid for South West Water was rife.
Most dealers expected London's upsurge to continue in the short term, especially if bid expectations are fulfilled.
Strategists were impressed with London performance. Mr Richard Jeffrey, group economist at Charterhouse Tilney, said he expected the Footsie to reach 4,000 this quarter. But he cautioned that political constraints would affect the market during the second half.
Mr Ian Harnett, at SGST Securities, remained positive of British stocks and pointed to London's substantial under performance against other European markets since the start of the year. He expects the market to be driven by at least £20 billion sterling of bids in Britain this year, against last years £32 billion.
The market was in top gear from the outset of trading, responding initially to the 60 point overnight gain in the Dow Jones Industrial Average and to bullish British economic news. The Royal Institute of Chartered Surveyors reported a big increase in activity in the British housing market.
There was exceptionally heavy activity in the FTSE future and index and stock options. Turnover in the options market rocketed to over 86,000 contracts with calls out pacing puts by two to one.
Adding to the market's optimistic mood was talk of a German rate cut.
Turnover at 6 p.m. came out at 869.7 million shares, with nonFootsie stocks accounting for 60 per cent of the total.
