The current take-over excitement in the telecoms arena, triggered by Vodafone's intervention in the bid tussle for AirTouch of the US, was the trigger for another powerful showing by London's equity market yesterday.
The buying frenzy in telecoms spilled over into other sectors, but was especially evident in the banks and insurance stocks.
At the height of the market's buying spree, the FTSE 100, London's benchmark index, looked like challenging its all-time closing high of 6,179.0. But it faltered when the index was only a point short of registering a 200-point gain.
At the close, Footsie had chalked up a 190.6 advance to 6,148.8, only 30.2 away from its previous closing peak. That represented the third biggest points rise ever in a single session, although it was well down the list of percentage gains. Footsie's record intra-day high is 6,183.7.
Dealers said the momentum behind the surge came from Wall Street overnight, where the Dow Jones Industrial Average raced up to within around 70 points of its record high in response to the news about AirTouch.
London's strength intensified during the afternoon as the Dow was catapulted to a record intra-day high, clambering through the 9,400 level in the process.
Wall Street's momentum carried through into Asian markets early yesterday, driving Hong Kong and Tokyo sharply higher and providing European markets with the perfect take-off.
Although there are doubts over whether the Bank of England's monetary policy committee will sanction another reduction in British rates at noon today on completion of its regular two-day meeting, many expect rates to come down to 5 per cent by the end of the year.
More evidence of the strength of the market's advance came from the performances of the second and third-line indices. The FTSE 250 jumped 74.2 or 1.5 per cent to 4,944.4. That index remains, however, a long way from its previous record close of 5,966.6. The FTSE SmallCap leapt 20.3 or 1 per cent to 2,110.3.
A big bought deal in Telewest, the cable company, executed by Dresdner Kleinwort Benson, boosted market turnover, which reached 1.5 billion shares. The broker bought 253 million Telewest shares from Cox Communications and quickly placed them in the market.
