A strong performance by Vodafone, the mobile telecoms group which is the UK market's biggest stock, helped to push the FTSE 100 index into positive territory yesterday.
Vodafone rose 5.5 per cent on the day, contributing the bulk of Footsie's 47.1 point gain to 6,382.0 as investors reassessed Wednesday's news of the purchase of a stake in China Mobile and better-than-expected third-quarter subscriber numbers.
On the economic front, the Bank of England kept rates on hold as expected. As it issued no statement, analysts will have to wait for the publication of the minutes in two weeks to get an insight into its reasoning and to find out if the monetary policy committee was split down the middle again. The last two meetings saw a 5-4 vote in favour of unchanged rates.
However, Philip Shaw, UK economist at Investec, warned rates might still rise in November. "The MPC remains unconvinced that domestic demand is slowing sufficiently and the fact that it has not tightened for eight months largely reflects that below-target inflation affords it the luxury of being able to wait and see, at least so far."
The UK market was little affected by the Bank of England announcement; Footsie was around 40 points ahead when the news came through, close to what turned out to be its closing level. At its peak, the index was 58.2 up at 6,393.1.
Rates did rise yesterday, but in Europe, where the European Central Bank's 25 basis points increase took most analysts by surprise.
However, the European equity markets, while losing some of their early gains, did not seem to be too upset by the move; an increase was expected at some point this quarter. The move, however, did nothing to help the euro, which slipped below 87 cents to the dollar.
Wall Street gave a rather mixed lead. Both the Dow Jones Industrial Average and the Nasdaq Composite had enjoyed a strong rally on Wednesday but they lost some ground in early trading yesterday, on the back of a sales warning from Dell Computer and the planned closure of one of Priceline.com's operations.
Technology stocks in the UK turned in a fairly mixed performance. While there were strong gains from Footsie groups such as Bookham, Misys and Logica (despite plans for a deeply discounted rights issue), the Techmark 100 index ended down on the day, losing 11.54 to 3,730.02.
