A series of well-received announcements from British corporates helped the FTSE-100 index romp ahead, on a day when nervousness about a rise in interest rates might have been expected to weigh on sentiment.
Figures from BP and BAA both led to sharp rises in the companies' share prices, with the strength of the former adding 13 points to Footsie. And Pearson continued to benefit from the bullish statement that accompanied Monday's results.
For once, a bank let the side down. After sharp rises in the shares of HSBC and Lloyds TSB on the back of their results, NatWest disappointed investors when it played down merger hopes as it published its figures.
On balance, however, the corporate news was positive and allowed investors to ignore some unfavourable factors. Sterling rose another 1 3/4 pfennigs against the deutschmark, while the benchmark 10-year gilt lost around a third of a point. On Wall Street, the Dow Jones Industrial Average was 32 points lower when London closed.
None of this deterred Footsie which started the day strongly and never looked back. The leading index opened up 26 at 4,921.7, which turned out to be the day's low. By the close, it had risen 64.9 to 4,960.6, only 3.6 points off the all-time closing record, set on July 16.
Significantly, small and medium-sized stocks once again lagged the leaders. The FTSE Mid-250 index gained just 13.6 to 4,498.6, while the SmallCap index edged a mere 0.5 points higher to 2,189.1. Volume was a healthy 945.2 million shares by the 6 p.m. count.
Mr Stuart Weatherby, British economist at Panmure Gordon, says: "Again, it seems to be overseas buying of the larger stocks, notably pharmaceuticals and oils, pushing the market higher. Given that people are talking about a rate rise this week, it does seem a bit strange, but at the end of the day, you can't argue with liquidity."
A larger-than-expected rise in industrial production in June added fuel to the debate about whether the monetary policy committee of the Bank of England will agree to raise interest rates when it meets today. (The committee's decision will be announced tomorrow.)
In contrast, the Confederation of British Industry's regional trends survey continued to show weakness in exports and manufacturing orders. And there was a slight drop in the rate of expansion in the service sector in July, according to a report from the Chartered Institute of Purchasing and Supply.
Analysts were divided on the implications of the figures. Mr Simon Briscoe, British economist at Nikko Europe, said: "Services growth is still strong, but the survey has sufficient evidence to support a decision by the bank to leave rates on hold on Thursday." But Mr David Bloom of HSBC James Capel said: "On balance, we expect the MPC to raise rates by a quarter of a point on Thursday, putting a seven in front of base rates for the first time since January 1993."
