London's stock market shrugged off some worrying economic news yesterday, preferring instead to focus on the increasing hopes of recovery in the US that have emerged in recent sessions.
The latter was behind the storming performance of Wall Street on Wednesday, when the Dow Jones Industrial was catapulted back through the 10,000 level, surging more than 220 points. Even more impressive was the Nasdaq, which broke above its 200-day moving average and moved clear of the 2,000 level.
US markets gave further upside impetus to London yesterday with the Dow and the Nasdaq making progress at the start of US trading, although both were well below their best as London closed.
The FTSE 100 index ended the trading session 36.3 higher at 5,369.8, having reached 5,411.2 at its best of the day.
The index drove up to its high following some aggressive buying of the FTSE future, believed to be in the region of 15,000 contracts, with one institution buying 1,500 contracts every 20 minutes. That level of demand would equate to some £800 million being put into the London market.
The FTSE 250 and the FTSE SmallCap vied for top performance among the leading indices. The 250 raced up 86.8, or 1.4 per cent, to 6,074.3, and the SmallCap 33.9, or 1.3 per cent, to 2,660.9. The recently outperforming Techmark 100 was up 10.46 at 1,604.48.
While the FTSE 100's performance yesterday was more restrained after its surge on Wednesday, dealers reported renewed support for various sectors, notably media and insurance, which raced higher at the expense of some of the more defensive areas of the market.
They also pointed out that the rebalancing of the MSCI indices had probably created short positions and stock shortages, which added to the market's volatility. Dealers also said that fund managers are frightened of being left behind by the market in any pre-Christmas run.
Turnover in the market was again robust, topping moving above 3 billion. The day's economic news included a 1.1 per cent decline in industrial production in October. Manufacturing fell 0.3 per cent.
UK house prices accelerated strongly to show a 2 per cent increase in November.
