LEFT to its own devices in the absence of any US influences, London's equity market never looked anything but comfortable yesterday, boosted by a sharp rise in oil shares and a number of excellent individual performances.
It shrugged off the lingering effect of the poor performance by Wall Street at the end of last week, and instead concentrated on a raft of optimism about potential takeover bids and encouraging news on the domestic economic front.
The end result was a strong rally in the FTSE 100 index, which managed to recoup almost all of Friday's decline. It closed 16.8 higher at 3,884.4, not far short of the day's best. The extent of the London market's recovery was limited, however, to the leaders.
Second line stocks, represented by the FTSE Mid250, were never in good shape and the Mid-250 index spent the day in negative territory, eventually closing a net 2.2 off at 4,414.0.
Dealers noted that the Mid-250 index was burdened by a handful of poor performers, such as Blenheim, whose shares plummeted over 15 per cent in the wake of the termination of takeover talks and Henlys, down almost 5 per cent after worries about margins.
There was no doubting the impact of recent events in the Middle East, where Iraq's military intervention and subsequent withdrawal triggered a steep rise in crude oil prices, which, in turn, saw oil shares leap ahead.
Big gains in the integrated oil majors BP, Shell and Burmah Castrol - as well as the exploration and production stocks - Enterprise and Lasmo were worth just short of seven FTSE 100 points. Oil sector specialists warned, however, that the sudden jump in oil prices could well correct itself in the near future leaving the sector overbought.
With Wall Street closing well off its lows on Friday evening, London opened in reasonable form and made good early progress after news of a strong British purchasing managers index for August, which showed a good revival in the manufacturing side of the British economy.
MO money supply statistics were viewed as slightly disappointing and helped damp down the gilts market, which showed minor falls during the morning session. But the overall picture in equities was bullish with the ever present takeover stories still in the background and driving stocks like Zeneca and Lloyds Abbey Life.
Mr Richard Jeffrey, economist at Charterhouse Tilney, the stockbroker, remained bullish on the stock market and the economy:
"We're beginning to see the revival of the manufacturers, which will be reflected in the performance of those sectors; July was dire, now the pick up is starting to come through forcefully."
Turnover in equities at 6 p.m. was a dismal 371.6 million shares. Customer business on Friday was valued at £1.55 billion.
