Investors seemed determined to stage a rally in the UK market yesterday, and they duly pushed the FTSE 100 index sharply ahead, despite some rather gloomy economic news.
Domestic data, as expected, showed that gross domestic product grew by just 0.3 per cent in the second quarter, the smallest increase since the fourth quarter of 1998. Service output growth dipped to 0.6 per cent from 0.9 per cent in the first quarter.
Attention then switched to the US GDP data which showed annualised growth of 0.7 per cent, slightly less than the market had been expecting. The Dow Jones Industrial Average duly dropped by around 80 points at one stage, but even that decline caused barely a ripple in the London rally.
It looked as if investors decided that, despite the gloom on the economy and corporate profits, share prices had fallen far enough by Wednesday - the FTSE 100 index was 24 per cent below its peak - to make them attractive.
A surge in the last few minutes took the FTSE 100 to its high of the day, up 117.0 at 5,403.1, at the close. That left the blue-chip benchmark up 0.3 per cent at the end of a week during which it had hit its lowest level since October 1998.
Two of the market's biggest sectors led the rally. Bank stocks rose in the wake of the latest numbers from Lloyds TSB while telecommunications stocks, led by Vodafone, rebounded from their recent woes.
And there was some good news for the technology sector, despite the horrendous $50 billion loss announced late on Thursday by JDS Uniphase. US durable goods data released on Thursday showed a surge in semiconductor orders, giving hope that the bottom might have been reached for technology demand. The Techmark 100 index of leading technology stocks jumped 37.52 to 1,519.05, leaving it up 0.4 per cent on the week.
But the gains were pretty broadly based, with just nine Footsie stocks falling in price yesterday.
Ms Nicola Merrell, the technical analyst at JP Morgan, said the Footsie would need to rebound above 5,550 to be completely out of danger.
Turnover was just £1.91 billion by the 6 p.m. count, indicating that the rally had not been driven by heavy volume and, of the individual stocks, only Vodafone traded more than 100 million shares.
