Last week's dismal sequence of five losses in a row was quickly forgotten as British shares responded enthusiastically to Wall Street's strong closing performance on Friday and again at the outset of trading yesterday, and to a spate of well-received corporate reports from some FTSE 250 stocks.
And helping to galvanise the market was a bout of weakness in sterling, especially against the deutschmark, which encouraged widespread and often substantial gains across exporting companies. The deutschmark rise followed remarks by Dr Hans Tietmeyer, President of the Bundesbank Council, seen by the market as opening the way for a rise in German interest rates in the short term. The next meeting of the Bundesbank Council is on Thursday.
Just about the only gripe for London's marketmakers and salesmen was the continuing low levels of genuine institutional business across the market.
Yesterday's turnover reached only a miserable 586.5 million shares. That figure showed turnover in non-FTSE 100 stocks accounted for 64 per cent of the total, well above usual levels.
Dealers said that even accepting Monday is usually the quietest day of the week, when the big institutions ponder their short and medium-term strategies, yesterday was exceptionally quiet.
At the finish of the session the FTSE 100 posted a healthy 54.7 gain at 4,902.9, recouping some of the 146 points, or 2.9 per cent, it lost last week.
There were much less impressive performances from the two smaller indices, the FTSE 250 and FTSE SmallCap, however, despite a spate of generally well-received trading statements, especially from many of the 250 constituents.
The former closed 6.1 ahead at 4,636.9, and was burdened by a poor showing by Thorn, the mainly-electrical goods rental and retailing group, whose shares retreated after the company lost a court case in the US, which could lead to substantial damages against it.
The Smallcap, meanwhile, edged higher, ending the day 2.8 firmer at 2,274.0.
The rest of the week brings with it a long list of crucial economic data from both sides of the Atlantic as well as a large number of corporate reports, mostly from FTSE 250 stocks but also from no less than seven FTSE 100 constituents.
In the US, inflation figures and industrial output details are due today while in the UK all eyes will be focused on the retail sales figures for last month.
It was benign numbers on retail sales and producer prices that drove US Treasury bonds and US stock on Friday, when the Dow Jones Industrial Average ended an extremely volatile session up 81 points and when bonds closed with gains in excess of a full point.
The FTSE 100 kicked off with big gains, but ran out of steam in mid-morning when it became clear that UK and European institutions were not chasing the London market.
