Continuing its run of rather erratic movements of late, London's leading stocks, represented by the FTSE 100 index, staged an abrupt turnaround during the last 30 minutes of the trading session, mirroring a similar move by Wall Street's Dow Jones Industrial Average.
At the finish, the FTSE 100 index showed a 34.6 gain at 5,877.5, having been down 75.2 at worst. It was not such a good day for the FTSE 250 and SmallCap indices, however, the latter settling 11.1 off at 3,086.3 and the former 7.8 off at 6,476.7. The Techmark was 4.93 easier at 1,990.25.
Dealers in London said the FTSE 100's late rally was entirely due to Wall Street's move. "Before that we had virtually ignored what was mostly some market-friendly domestic news and it's slightly surprising to see Wall Street suddenly turn so bullish so quickly given its knee-jerk reaction last night," said one market-maker. The newly invigorated Dow sprinted back through the 11,000 level, which has proved such a difficult barrier to regain.
Before the late rally, there had been more than a whiff of disappointment and anti-climax in London's equity market as investors refused to chase UK stocks any higher after Tuesday's strong upward correction. Dealers said the good news on US interest rates had already been factored into prices and the UK news, although welcome, was broadly as expected.
With the Dow future indicating further weakness in the US market, London drifted back in relatively subdued trading.
The Labour Party picked the right day to launch its general election manifesto, with the Bank of England's quarterly inflation report showing inflation likely to remain under the 2.5 per cent target.
And there was good news for the government with the April employment data, which showed unemployment down 10,200 and at its lowest level for 25 years.
The average earnings data, which showed a 5.1 per cent year-on-year increase in earnings, were slightly higher than the consensus forecast of 5 per cent, but did not have an impact on the bullish sentiment in gilts.
Turnover in equities picked up well to reach 2.01 billion shares.
