After two days of triple digit gains and losses, the FTSE 100 index settled down to a quieter session yesterday.
Perhaps there was some caution ahead of the US Federal Reserve's interest rate decision after the market close, although few observers expected a change in rates. Wall Street looked relaxed ahead of the Fed news.
Whatever the reason, the market traded in a fairly narrow range by recent standards. The FTSE 100 index closed up 19.4 at 6,432.3, having been 6,459.3 at best and 6,371.7 at worst.
The other indices also edged ahead. The FTSE 250 rose 21.7 to 6,719.9, the SmallCap gained 7.8 to 3,342.1 and the Techmark 100 17.16 to 3,194.17.
On the corporate front, Cable & Wireless followed Vodafone's example on Tuesday by giving the market a lift with its figures. And software group Misys was the best-performing stock in the Footsie after a reassuring trading statement.
But gases group BOC suffered from profit-taking after releasing its figures.
There were no significant new profit warnings but shares in Future Network and GB Railways suffered in the wake of Tuesday's cautionary statements.
The latest UK employment data were rather mixed, in its market implications. Average earnings rose by 4.1 per cent in September (on an underlying three-month basis), compared with 3.9 per cent in August. The private sector growth rate accelerated to 4.6 per cent in September from 4.4 per cent in August.
But if that suggested the labour market was tightening, there were some confusing jobless figures. A surprise 3,500 rise in the claimant count in October was offset by a fall in unemployment as measured by the labour force survey.
Better-than-expected inflation figures on Tuesday encouraged hopes that the next move in UK interest rates will be down. The Bank of England's quarterly inflation report, released today, may give further clues as to the direction of UK rates.
"With the labour market this tight, and the government planning to loosen fiscal policy markedly, we feel that talk of rate cuts is misplaced unless the economy slows much more sharply than it has done so far," said Mr Michael Saunders, UK economist at Schroder Salomon Smith Barney.
In the wake of recent warnings, the monthly Merrill Lynch survey of UK fund managers found an air of gloom about corporate profits. Those who were pessimistic about the outlook outnumbered the optimists by 24 percentage points. That compared with a difference of 12 points in October; in September optimists were in the lead by 30 points.
However, a balance of 32 percentage points of managers felt that equities were undervalued and buyers continued to outnumber sellers.
