THE "feel good factor" was again much in evidence in London's equity market yesterday, with the market's largest indices, the FTSE 100 and the FTSE Mid 250, both ending at all time closing highs.

As with recent sessions, the market's main thrust came from good news on the UK economy, as well as the continuing expectation of more big takeover bids in the pipeline.

On the international front, global markets became increasingly bullish about the prospects of another interest rate reduction in Germany. Across the Atlantic, Wall Street opened in good shape, building on Friday's performance which saw the Dow Jones Industrial Average close 45 points up on the session.

There was an element of disappointment around the market's trading desks that the FTSE 190 did not manage to penetrate its previous all time intra day high, 3,792.5, which it reached on March 5th.

This was attributed, dealers said, to worries about the British government's position, with its overall House of Commons majority cut to one last week in the wake of the Staffordshire South East by election. Over the weekend, there were suggestions in the press of further defections from the Conservative Party.

But the general feeling was that the Footsie would get through that level if Wall Street maintained its current performance.

"If we get over that hurdle, then we'll push on again, probably well into the 3,800s in quick time", said one senior trader.

"The institutions are scared of being short of the market the moment; if they miss the boat now it might race away from them", the dealer continued.

The FTSE 100 settled a net 23.7 firmer at 3,790.5, eclipsing its previous closing record, while the FTSE Mid 250 index posted its fourth consecutive all time high, finishing 8.7 to the good at 4,416.7.

Turnover in the market at the 6 p.m. reading came out at a healthy 741.3 million shares, well above usual levels of activity for a Monday, although dealers were at pains to point out that over 67 per cent of the day's business was in non FTSE 100 stocks.

The trading session began convincingly, with the Footsie getting off to a bright start, celebrating Wall Street's jump on Friday and more good news on the domestic inflation front with producer input and output prices showing only minor increases in March.

Dealers were reluctant to get too carried away with those numbers, preferring to wait until details of unemployment, earnings and unit wage costs figure are published tomorrow. They also looked for March inflation numbers, due on Thursday.

But the bid hopes and evidence of more trading programmes, all weighted on the buy side, drove share prices higher for the rest of the session.

German interest rate cut hopes propelled RMC and Redland sharply higher, with the former additionally lifted by expectations of a healthy profits increase when it releases preliminary figures on Thursday.

Hotels shares were given a boost by an upbeat trading statement from Stakis.