The three-day slide in UK equities was halted yesterday as bargain hunters moved in to take advantage of what was seen by some as an oversold market. During that period, the FTSE 100 index had fallen more than 300 points, or 5.7 per cent.
A strong rally on Wall Street overnight, after the release of the video testimony of President Clinton, was the main driving force behind London, where Footsie finished the session 113.0 higher at 5,105.3.
The Dow Jones Industrial Average recouped an early 180-point slide to finish Monday 37 points ahead, giving strong encouragement to Asian and European markets. A sluggish start to yesterday's US session was surprisingly shrugged off by traders in the City.
Adding to the momentum of London's performance was a story that a bid for Reed International could be on the boil.
And there was an improvement in sentiment regarding the possibility of a reduction in US interest rates after next Tuesday's meeting in Washington of the US Federal Reserve's open market committee. The other FTSE indices were nothing like as impressive as the 100 index, with the 250 climbing 19.1 to 4,572.2 but the SmallCap losing an early modest gain to finish 1.7 easier at 2,036.0.
Dealers said there remained extreme nervousness about the potential for more profit warnings from leading UK companies, one of the factors that has undermined confidence in the London market.
There was widespread relief that there were no more damaging statements from FTSE 100 constituents yesterday, after the spate of warnings from RMC, Bass, Shell and EMI.
Turnover in equities was 979.4 million shares.
