Reassuring performances from the Far East and Wall Street, plus an element of relief that there were no unpleasant surprises in the British Chancellor, Mr Gordon Brown's "Green Budget" on Tuesday, brought widespread gains to British equities yesterday.
Additional help came from more bid action in the form of an increased offer from Lafarge of France for Redland, the building materials group, which was notified to the stock exchange after the close on Tuesday.
Just about the only bad news for stocks came from the trade figures, which received a cool reception in the market and saw gilts initially slip back.
With Wall Street coming in on a firm note, London finished in good heart, although well below its session high.
The FTSE 100 index recrossed the 4,900 barrier, peaking at 4,907.1, before coming off to finish the day 27.7 higher at 4,891.2. The second-liners and smallcaps were also well-supported. The FTSE Mid-250 settled 20.5 up at 4,651.8 and the FTSE SmallCap rose 5.2 to 2,266.1.
The trade figures drew cautionary responses from some economists. Mr Adam Cole, at HSBC James Capel, said: "The latest data are the first hint that the trade balance is beginning to deteriorate following sterling's depreciation. That said, the rise in the deficit is unlikely to be dramatic as export volumes are holding up well. We continue to believe that sterling's impact on exports and hence GDP growth will be more modest than has been the case in the past, putting further upwards pressure on base rates to cool the economy."
Some fund managers remained unconvinced about the bearish stories regarding global markets in the wake of the Asian crisis.
A senior fund manager at one leading British investment management group insisted the undertone in London remained solid, underpinned by liquidity. "The cash coming into the market will be boosted substantially by the bids for Mercury Asset Management, worth £3.1 billion, the £1.8 billion for Redland and the £1 billion-plus for Allied Colloids."
He also pointed out that the amount raised for rights issues this year was swamped by the cash being injected into the market from bids.
