The omens in London's equity market at the outset of trading yesterday did not look good. The Hong Kong market slipped again, albeit only less than 1 per cent, and Wall Street delivered a less than enthusiastic performance on Tuesday, with the Dow Jones Industrial Average finishing a mere 14 points higher.
To make matters worse, the Stock Exchange's trading system failed for the first time since the introduction of the new order book. Dealers and institutions, who have been struggling to come to terms with the changed method of trading the FTSE 100 stocks, were forced to make prices and trade via the telephone.
But that was as bad as it was to get until mid-afternoon. The system was up and running well within an hour - the Stock Exchange claiming the fault occurred because of a breakdown in an information link unrelated to the new dealing system - and the day's economic news was on balance positive for equities.
As soon as trading commenced in earnest, share prices ran ahead strongly, with buying interest in the cash market fuelled by keen demand for the future and in the wake of a spate of positive corporate results from leading stocks.
Wall Street was expected to add to the overall rosy picture in the market but came in only marginally higher, before slipping into negative territory and then embarking on a good rally after London closed.
Footsie hit a session high of 4,947.6 shortly after midday, but thereafter began to wilt, affected by a series of programme trades, mostly weighted on the sell side. They drove the index back down below 4,900, before a late rally left the index 10.9 higher at 4,908.3.
Dealers said the surge in programme trade activity was a direct result of the institutions' frustration with the new order-driven system. "The institutions have been struggling to deal and the impression is that they have decided, for the time being at least, to trade via programmes," said a dealer at one big integrated house.
The FTSE 250 index settled 12.0 up at 4,686.8, its fourth successive gain. Over that period, it has put on 62.8 points, or 1.4 per cent. The FTSE SmallCap index, also posting its fourth straight gain, rose 3.6 to 2,325.3.
A stronger-than-expected survey of the service sector by the Chartered Institute of Purchasings and Supply was countered by news of a dip in industrial production in September.
