It was another good day for London's equity market as takeover action erupted once again in the banking sector and elsewhere. And the market was pleased with a reasonably upbeat report on industrial trends published by the Confederation of British Industry. The survey said manufacturing demand in Britain is rising for the first time in almost two years, despite the high value of sterling.
A slightly worrying performance by Wall Street on Wednesday, where the Dow Jones Industrial Average lost an early three-figure rise to finish marginally ahead and the Nasdaq Composite fell sharply, did little harm to sentiment in London. But the US market did help when it opened again yesterday, with the Dow racing up 130 points in early trading.
Dealers said they had been reassured that no bad news was forthcoming from Mr Alan Greenspan, chairman of the US Federal Reserve, as he addressed the US Senate banking committee on Wednesday. In the background, however, there remained an element of unease about the prospects for a round of interest rate rises in the US, the euro zone and Britain.
The US Federal Reserve's open market committee meets on Tuesday and Wednesday to debate US monetary policy, with the odds said to be in favour of a 25 basis points increase.
The European Central Bank is next, with its governing council meeting in Frankfurt on Thursday; yesterday Barclays Capital called for the ECB to increase euro-zone rates by 50 basis points because of inflationary pressures and to arrest the slide in the euro.
The FTSE 100 index ended up 65.4, driving through 6,400 to finish at 6,441 and extending the rise over the past two sessions to 166.9 or 2.7 per cent. The second- and third-tier FTSE indices, the 250 and SmallCap, did not do so well. The FTSE 250 pushed up 17.5 at its best, but that strength quickly evaporated as some of the recent high-tech favourites began to lose heart. By the close the FTSE 250 was down 6.2 at 6,311.4, not far from the worst of the day.
It was a similar story in the SmallCap, where the index was never comfortable, an early 3.1 gain being erased over the lunchtime period and eventually replaced by a 5.9 decline at 3,188.6.
Bank of Scotland's increased bid for NatWest produced plenty of excitement in the sector, with dealers now looking for Royal Bank of Scotland to up the ante. NatWest was outpaced in the market, however, by Barclays and Lloyds TSB, with the latter seen as waiting in the wings, possibly to pounce on any casualty of the takeover battle.
Turnover in equities was 1.7 billion shares.
