It was an action-packed session on London's stock market yesterday, with BT duly delivering its widely expected record-breaking rights issue and a comprehensive restructuring package.

And the Bank of England's monetary policy committee similarly caused few shocks in the market in announcing the widely predicted 25 basis points reduction in domestic interest rates. But what did shock the market and produced a burst of enthusiastic buying of UK and European stocks in general was the move by the European Central Bank to lower euro-zone interest rates by 25 basis points.

While the BT news had a restraining impact, and the monetary policy committee decision was seen as no more than supportive, the European news provided the perfect kick-start to the FTSE 100. The Footsie immediately accelerated from its previous showing and launched another run at the 6,000 level, before eventually running out of steam. It closed the day 70.3 higher at 5,964.0, having reached a session high of 5,987.5 in the euphoria following the ECB cut.

The FTSE 250, meanwhile, closed 40.3 up at 6,520.6, the SmallCap 8.7 was higher at 3,089.4 and the Techmark 100 15.83 firmer at 2,044.68.

Prior to the interest rate news, London had struggled to cope with the announcement of BT's near £6 billion sterling rights issue priced at a 47 per cent discount to Wednesday's closing level.

Although expected, confirmation of the whole package, which included the passing of the final dividend and next year's interim, saw BT shares wilt for the third consecutive session and move to the top of the FTSE 100 losers' table.

But the rest of the market quickly overcame its initial weakness and began to pick up, helped along by decent performances by many TMT stocks and especially by a resolute showing by Vodafone, whose shares recrossed the 200p level.

Economic news, announced before the rate cut, showed a 0.2 per cent decline in UK industrial production in March and a similar decline in manufacturing output, numbers that must have added to the pressure for a UK rate cut.

Turnover in equities reached 2.23 billion, with Vodafone and BT accounting for 23 per cent of the total.