THE London market's irrepressible mood continued yesterday, with all the main FTSE indices building on last week's strong performance and posting new intraday and closing highs.
Behind the latest upside spiral, which saw stock prices across Europe hit new highs, was last Friday's move back above the 7,000 level by Wall Street's Dow Jones Industrial Average and some encouraging economic news.
The latter included a sharp retreat by sterling, which fell around a point on the Bank of England's index against a basket of leading currencies, plus news of much weaker than expected producer input and output prices.
Sterling's three pfennig decline against the deutschmark and a near one cent fall against the dollar gave an instant push to the big exporters.
The currency's drive was prompted initially by remarks from Mr Eddie George, governor of the Bank of England, who said he expected the UK to achieve its 2.5 per cent inflation target by the middle of the year.
However, he also warned that he expected the inflation rate to pick up during the following year.
The producer price data were interpreted by the market as an indicator of lessening inflationary pressures. Both input and output prices were lower than forecast and seen as reducing the possibility of an early increase in UK interest rates.
Adding to the generally bullish feeling around the stockmarket was a generally well received batch of company news reports coupled with the continuing expectation of a renewed burst of merger and/or takeover activity in the near to medium term.
The FTSE 100 index powered ahead to a new closing record of 4,437.4, up 17.1 on the session having spiralled upwards to a new all time high of 4,440.8 during the morning session.
Other FTSE indices were equally impressive, the FTSE 250 moving ahead to end the day a net 15.4 higher at a record 4,729.2. Not to be outdone, the SmallCap index closed 3.5 to the good at a peak 2,366.1.
Dealers said the stock market had now factored in most of the political risks - a new Labour government is seen as a virtual certainty - and was now concentrating on the market's fundamentals after the general election.
The latest company news reports were generally welcomed, with figures from top quality companies such as Laporte and IMI, to name but a few, helping to encourage the big institutions.
Other news items that excited - the market included excellent earnings news plus the surprise of the flotation of General Cable, announced by Wassall, the conglomerate.
