London Report: London's stock market had to cope with a dose of mid-afternoon turbulence yesterday, but managed to emerge from the session, and the week, showing gains across the board.

The afternoon hiccup came after some mildly disruptive US economic data on housing starts, which sparked pockets of profit-taking in US markets and took the shine off London stocks. While the housing news gave markets a bit of a fright, the more important news on US inflation and the Michigan Consumer Sentiment Index were both well within the narrow range of market forecasts and provided comfort to investors.

At the end of a busy session, the FTSE 100 index settled with a 2.5 gain at 4,330. Before the afternoon slide the 100 index had taken a strong run at 4,400 reaching a high of 4,382.3, up 53.8.

Fair value for the FTSE 100 future expiring on September 20 was estimated at a premium of 2.33 to the cash market.

Before the afternoon events London stocks built quietly but steadily on their recent gains, bolstered by another show of strength from US markets on Thursday evening and an encouraging set of second-quarter numbers from computer giant Dell, after Wall Street closed.

But, while the main indices initially moved forward quite confidently, there was never any substantial weight of new money coming into the market.

The passing of the August 14 deadline imposed by the US Securities and Exchange Commission on chief executives to certify company accounts, continued to bring much-needed relief to Wall Street.

Mr David Franklin, director of retail funds at Christows, the private client portfolio manager, said: "Footsie has pushed up through resistance at 4,280/4,300. The inverted head and shoulders pattern gives a new price target of 4,698 or thereabouts."

He warned, however, that "the upside will abort on a close back below 4,280", and introduced a note of caution on the mid- and small caps, which, he said, were not showing similar strength.

"This lack of breadth is symptomatic of a risky and volatile market which could reverse direction at any time... My view is that the FTSE 100 will push upwards towards 4,698 and that mid- and small caps will continue to underperform." - (Financial Times Service)