A LATE and powerful bout of takeover speculation in Standard Chartered helped put the seal on a breathtaking session which ended with the FTSE 100 index at a record closing level.
Strong rumours circulating in the City's dealing rooms towards the close suggested that an 850p a share bid for Standard Chartered from one of the powerful German banking groups was imminent. Rumours of a bid for Standard Chartered regularly emerge, but there was heavy, albeit strongly speculative, buying behind the rise yesterday.
The FTSE 100 was finally a net 23.2 ahead at 3,758.2, while the FTSE Mid 250 index built on a solid performance all day to end 14.5 firmer at 4,086.9.
The upward drive by the market just before the close was also prompted by one of the now commonplace opening surges by Wall Street, which challenged its previous all time high, helped along by a sudden and sharp jump in US Treasury bonds.
A batch of weaker than expected economic numbers from the US were said to have been responsible for the firmer trend in Treasury bonds, with US markets again taking seriously the possibility of a further cut in US interest rates after the Federal Open Market Committee meets next Tuesday.
Adding to the general mood of optimism in the US was a better feeling around the budget deficit debate, with some market observers taking the view that a settlement of sorts, even a short term agreement to increase the lending ceiling, would be seen as very good news for US and global markets.
Earlier in the day European equity markets had moved into top gear after the Bundesbank sanctioned a 10 basis points reduction in the German repo rate, a move interpreted by dealers as paving the way for a further reduction in Germany's key lombard and discount rates in the near future.
Relatively large swings in share prices were accompanied by heavy trading across the market. Turnover reached a hefty 861.5 million shares. There were no really exceptionally high turnovers, just a broad spread of keen interest. Non FTSE 100 stocks accounted for just over half the day's total.
The value of customer, or retail, business in the market on Tuesday came out at a relatively healthy £1.73 billion sterling. Retail business has not fallen below the £1.7 billion for the last six trading sessions.
An overnight 27 point slide in the Dow Jones Industrial index saw the FTSE 100 open around 4 points lower, before picking up speed and moving ahead strongly on the German repo cut.
But with the Dow opening in sparkling form and racing up to show a 65 point gain an hour after trading commenced, the FTSE rose sharply.
There were plenty of other bid candidates being chased higher, including, Ladbroke, Thorn EMI, Rank Organisation, P & O, Rexam and Lasmo. British Biotech was the star performer in the Mid 250 stocks after a director moved into the market to pick up stock.
