A GROWING conviction around the market that a quarter of a percentage point cut in British interest rates, the third since December, is in prospect, saw London's stock market progress further yesterday.
Mr Kenneth Clarke, the Chancellor of the Exchequer, is scheduled to meet Mr Eddie George, governor of the Bank of England, on Thursday to discuss monetary policy, and the feeling is that the bank will rubber stamp a rate cut.
The interest rate optimism was not confined solely to London, dealers said. Wall Street made further rapid progress at the outset of trading yesterday, building on last Friday's 50 point rally and encouraging the bullish mood in British markets.
A bullish feeling took hold of the market, with the FTSE 100 index delivering an impressive performance, gradually building up a head of steam and closing only a fraction off the day's best levels.
It settled a net 15.9 ahead at 3,768.6, only 12.7 off its all time closing high and 23.0 away from its all time intraday high.
The Dow's rise on Friday and yesterday was attributed to the latest economic data, which added to hopes of a cut in US rates when the Federal Reserve Open Market Committee next assembles on March 26th.
The Bank of France, meanwhile, meets on Thursday to discuss monetary policy, while the Bundesbank council is scheduled to hold its next meeting on Thursday week.
London was additionally sustained by news of yet another takeover, the expected £900 million plus agreed offer from Kvaerner, the Norwegian shipping and energy engineering group, for Trafalgar House, the British conglomerate.
Adding to a general air of increasing bullishness in London was the expectation that a sizeable inflow of cash from funds managing Pepsi would drive markets higher for the rest of the month.
Turnover came out at 650.4 million shares, well up on usual levels of activity on a Monday. Much of the action was concentrated in the non FTSE 100 issues which accounted for 63 per cent of total turnover.
Among the individual stocks, food retailers captured two out of the top three spots among the FTSE 100 constituents after a report suggested supermarket prices would rise by 4 per cent this year. Boots also featured strongly, amid hopes of a substantial share buy back while Argos, reporting later this month, rose on speculation about a special dividend.
