A decline in sterling and a rally on Wall Street meant the FTSE 100 index was able to end the week on an upbeat note.
The pound continued its fall, which started on Thursday when the Bank of England decided not to increase interest rates. At one point yesterday, sterling dropped to a four-year low against the US dollar.
That move was a mixed blessing for the UK corporate sector commodities are priced in dollars but the pound's fall against the euro was much more welcome. On a trade-weighted basis, the pound slipped from 112.3 to 111.0.
Sentiment was helped by a sense that UK interest rates may be close to their peak.
Analysts pointed to the imminent change in monetary policy committee personnel, which will lead to the departure of Charles Goodhart and Willem Buiter, who have both been pushing for rate increases.
However, the FTSE 100's early gains - it was up 68.3 at one point - evaporated once the US non-farm payroll data were released. The figures showed a rise in employment of 340,000 and a 0.4 per cent increase in average hourly earnings. Both figures were in line with expectations although the dip in the unemployment rate to 3.9 per cent was greater than forecast.
According to the global economics team at ING Barings, the figures were "likely to reinforce expectations of a 50-basis-point rate rise at the Federal Open Market Committee on May 16th, and there may be at least one more rate rise to come after that".
The US Treasury bond market took the news badly and the stock market initially looked as if it would go the same way. But an opening dip in the Dow Jones Industrial Average and the Nasdaq Composite was quickly reversed. This allowed the FTSE 100 to climb off its low for the day, down 9.1 at 6,190.5.
By the time London closed, the Dow was up 150 points and the Nasdaq was 80 ahead.
That allowed Footsie to close up 39.2 at 6,238.8. Over the shortened trading week, however, it fell 88.6 points or 1.4 per cent.
The other indices also recorded modest gains. The FTSE 250 closed up 27.3 at 6,279, the SmallCap 13 ahead at 3,211.3 and the Techmark 100 33.44 higher at 3,753.85.
All three gained ground over the week, with the Techmark rising 2.2 per cent.
Credit Suisse First Boston, however, is pessimistic about the technology, media and telecom stocks. "The mini-rally over the last couple of weeks looks like nothing more than a technical rebound from short-term oversold levels."
Turnover was modest, although there was a small flurry of programme trades just before the close. By the 6 p.m. count, 1.44 billion shares had been traded.
There has been a steady decline since mid-March, when 140,000 bargains were being made per day. Private investors seem to have cut back their activity and now only 70,000-80,000 daily trades are being done.
