The end of a long and hot week in London brought with it a substantial rally in equities thanks to some much-needed good news overnight from leading US tech stock Cisco Systems.
The Cisco news, coupled with last Tuesday's cut in US interest rates and hopes that next week will bring a reduction in euro-zone interest rates after the European Central Bank's Council meeting, injected some real enthusiasm into the market yesterday.
Although it took some time to build up, sentiment in London gathered momentum and by mid-morning the indices were running ahead strongly, led in particular by the recently toiling technology, media and telecom (TMT) sectors.
The afternoon saw the market move up a gear as the latest US economic data, including stronger-than-expected new homes sales, was followed by steepling gains in the Dow, which was up more than 180 points as London closed, and the Nasdaq which put on more than 50 points.
Dealers said there were hopes that, with the end of the holiday period in sight, the market might stage a rapid advance and kick start a strong end-year rally, possibly led by the TMTs.
Others, however, were quick to point out that a big rally in the TMTs this time last year was followed by an equally rapid decline. In its latest monthly asset allocation review, the strategy team at Deutsche Bank said: "This month, despite the downturn in the dollar which many see as the harbinger of long-term economic gloom in the US, we feel more confident about the prospects for equities relative to bonds."
There was no stopping the buyers in the market yesterday with the FTSE 100 index closing a net 75.4, or 1.4 per cent, firmer at a day's high of 5,471.9. The FTSE 250 closed 22 up at 6,184.9, after 6,188.3 and the FTSE SmallCap added 5.7 at 2,728.8.
The best of the indices, in percentage terms, was the Techmark 100, which raced up 27.8, or 1.9 per cent.
Over the week, the FTSE 100 gained 129.8, or 2.4 per cent, the Techmark 100 1.9 per cent, the FTSE 250 0.7 per cent and the SmallCap 0.2 per cent.
Turnover in equities was a highly respectable 1.6 billion shares.
