A hard-fought struggle in London's stock market between the optimists and pessimists saw the former emerge triumphant for the second consecutive session. But the optimists got their way in the leaders only after a bitter tussle that saw the FTSE 100, London's benchmark index, move erratically. An early upward move was quickly swamped by sellers before a late rally.
Foots ended the session 32.9 ahead at 5,804.9, for a two-day rise of 92.5 or 1.6 per cent. That confident closing performance was in stark contrast to an unconvincing start to the day when the index struggled to make any progress at all.
Not everyone was convinced of the underlying strength of the stock market. Dealers pointed to the "dangerously erratic" nature of market moves, as one put it, and noted the late downturn in the second-line stocks, represented by the FTSE 250 index, which posted its 11th straight decline.
For much of the day, the 250 index looked likely to halt its sequence of losses, only to falter in the last half hour and drop into negative territory. It finished at the day's lowest point, 5,506.4, down 4.0; at its best, over the lunchtime period, it had been up 8.2.
Marketmakers pointed to sterling's latest upward move, which took the Bank of England's trade-weighted index above 107 before it finished the session at 106.9, up 0.2. That had unsettled many of the engineering and exporting stocks that figure prominently in the 250 index.
There was no respite, either, for the FTSE SmallCap index, which remained in the red throughout the session and eventually finished at a session low of 2,611.5, down 13.3.
Behind the early lack-lustre performance of the leaders was the continuing worry about problems affecting Asian economies - particularly Japan.
And there remained real fears around the City's dealing rooms that the recent batch of worryingly strong economic data could trigger a further increase in British interest rates, possibly as early as July 9th, when the Bank of England's Monetary Policy Committee announces its next decision.
Those worries offset a stunningly good performance by Wall Street on Tuesday, where the Dow Jones Industrial Average posted a 117-point gain on the back of big rises in high-tech stocks.
London's revival came in the wake of outstanding performances from a number of specific sectors, notably telecoms and oils. The former sector, already ablaze after the raft of positive news from Orange, the cellular phones group, was driven even higher after news of the AT&T move to acquire Tele-Communications, the US cable group, which triggered hopes of more consolidation in the telecoms arena.
Cable & Wireless, always viewed as a potential takeover target, raced higher, as did BT, albeit after an early dip which reflected disappointment that AT&T had moved against Tele-Communications rather than forging a link with the British group.
Turnover in equities reached 901.7 million shares at 6 p.m., of which 56 per cent was in non-Footsie stocks.
