WALL Street was again mainly responsible for the continuing strength of the British equity market, with share prices in London ending a lively session only a fraction off the day's best levels.
The Dow Jones Industrial Average shot up 42 points on Tuesday evening and made rapid progress at the outset of trading yesterday, posting a gain of some 45 points within an hour of the start.
The US market drew much of its latest strength from a good early showing by Treasury bonds, despite some none too inspiring economic news. London dealers, pointing out that Wall Street is now only 50 points short of its all time closing record, reached on April 3rd, said London could not resist the upward pressures from the US.
The FTSE 100 closed 16.5 higher at 3,776.2 for a two day gain of 37 points, or 1 per cent. The strength across the leaders did not carry over into the rest of the market, however. The FTSE Mid 250, modestly ahead in the morning, eventually settled 1.0 down at 4,508.8. Turnover at 6pm was 839.8 million shares.
London lacked support from the gilts market and never recovered from an uncertain start, closing with widespread losses in the wake of a series of disappointing economic news items.
These included a higher than forecast increase in underlying average earnings for March, which, at 3.75 per cent on an annualised basis, was said by observers to rule out any lingering chances of a further reduction in British interest rates.
The earnings report added to the market's unease which became apparent after the Bank of England warning on inflationary trends was published on Tuesday.
Some of the market's super optimists made the point, however, that anything is possible with a general election just around the corner.
The potential for share buy backs, one of the big positives for the market last year, was illustrated at the outset of trading when PowerGen, a late strong performer on Tuesday, confirmed its intention of buying back 10 per cent of its own shares, financed by the sale of its stake in Midlands Electricity.
Argyll, the Safeway supermarkets group, was another company to announce buy back news, telling shareholders of its intention to buy in 10 per cent of its own stock.
Grey market dealings commenced yesterday in Railtrack shares. IG Index said the stock opened at 209p before slipping back to 205p. Official trading starts on Monday.
