Global stock markets - London included - mostly took Wednesday evening's long-threatened US/British air strikes against Iraq in their stride.
Once it had overcome an initial bout of nerves, which saw the FTSE100 dip almost 40 points as some of the panicky sellers moved quickly, the London market regained its poise and traded comfortably higher for the rest of the session.
It was helped along by reasonably reassuring performances from overseas. Wall Street's modest decline - the Dow Jones Industrial Average fell 32 points ahead of the news from Iraq - was a reflection of the continuing impeachment process affecting President Clinton, which was put into abeyance after the air strikes.
The response of the most influential Asian markets, Hong Kong and Tokyo, both of which made good progress, gave heart to European markets.
At the close of business the FTSE-100 was 54.7 higher at 5,685.3, extending the gain over the three past three sessions to 150.7, or 2.7 per cent.
The FTSE Mid-250 struggled for much of the session, but settled a net 6.3 up at 4,695.9, while the FTSE SmallCap was finally 2.0 firmer at 2,012.1.
There was also encouraging news on the domestic economy with retail sales in November coming in surprisingly strong and up 0.8 per cent against a consensus forecast for a 0.2 per cent decline, which would have continued a series of weak performances.
Some economists warned against any over enthusiasm on the retail sales numbers. "Price discounting and November's rate cut are possible explanations," said Mr Ken Wattret at Paribas.
He said the figures are supportive of the "wait and see" view on interest rates and expects the Bank of England's monetary policy committee to skip a rate cut after next month's meeting and wait for the broader picture for sales over the festive season.
Mr Richard Jeffrey, group economist at CCF Charterhouse, said: "The retail sales news is much the more important of the two; consumer spending trends are not as weak as expected and that is a worry."
The Confederation of British Industry's December survey of Industrial Trends also provided some reassurance, pointing to a slowing of the decline in manufacturing.
The retail sales news helped inject much-needed confidence into a general retail sector that has suffered badly in recent months; GUS and Boots were prominent among the FTSE-100's best performers.
One retailer was in an especially good mood. Asda announced it was buying five stores from the Co-op and unveiled buoyant interim results lifting shares 61/2p to 154p.
Newcastle United was down 3 1/2p to 98p in a surprise fall after telecoms group NTL announced it had taken a 6 per cent stake in the club and won the option to buy another 51 per cent if it so wished.
Earlier rises were wiped out as dealers took profits and pondered the details of the deal. No takeover will go ahead before the Monopolies and Mergers Commission rules on the BSkyB bid for Manchester United in March.
Meanwhile, BSkyB saw its shares nosedive on the market - down 21p 480 1/2p. The fall was prompted by news that BSB Holdings - jointly owned by Granada, Pearson and France's Pathe media group - was selling 17 million shares. The sale reduces BSB Holdings stake in the satellite broadcaster to 12 per cent.
Hanson, the former conglomerate-turned-building materials specialist issued an upbeat trading statement. But shares in the group, due to return to the FTSE-100 Index on Monday, fell 4p to 461p.
Turnover in equities - 971.8 million at 6 p.m. - was generally lifted by events, but was also boosted by a number of big placings.
This morning brings the expiry of the December FTSE-100 and Mid250 index futures plus FTSE-100 index options.
