The gloom that descended on London's equity market for much of last week was emphatically dispelled yesterday as the final few minutes of the first trading session of the third quarter brought a startling surge in some of the recent underperformers.
Dealers admitted they had been caught on the hop by the sudden burst of buying interest, especially in the last few moments of the day. "There was a feeling that the market was oversold, but a rise of this nature is surprising, especially with Wall Street only trading for a half-day and closed on Tuesday for Independence Day," said one trader.
The market's dismal performance over the past few sessions, Friday excepted, had been attributed by many to the overall view that the uncertain outlook for interest rates in the UK, Europe and the US could curtail fresh support for equities.
Wall Street provided the underlying support for London, with the Dow Jones Industrial Average following up Friday's near 50-point gain with a further 60-point rise and the Nasdaq, up 88 on Friday, a more modest 20 points higher as London closed yesterday.
The driving forces behind the FTSE 100's triumphant performance yesterday also included the heavily weighted oil majors, BP Amoco and Shell, which gave a ready response to the latest rise in oil prices, which showed Brent crude nearing $31 a barrel.
The most influential stock performance came from Vodafone AirTouch, whose shares moved into top gear and finished almost 10 per cent higher, worth 70 Footsie points.
Dealers said the sudden charge by Vodafone stock reflected the view that the shares had been oversold following the huge prices paid for the third generation of mobile phone licences.
The FTSE 100 finished the day up 157.7 or 2.5 per cent at 6,470.4, its biggest points gain since early February.
Gains in the other FTSE indices were more modest, giving credence to the view that it was no more than a sudden and painful squeeze in the leaders that pushed the 100 index up so quickly.
The FTSE 250 was a sedate 13.7 better at 6,614.7 while the SmallCap edged up 6.6 to 3,360.9.
Lifted by the sharp rise in the telecoms and techs, the Techmark 100 was 37.05 firmer at 3,428.18.
Turnover in equities was a respectable 1.3 bilion shares.
