Wall Street's stunning recovery on Monday, and sweeping gains across Asian markets, helped London's equity market stage a much needed, if rather unconvincing, rally.
There was also limited assistance for British stocks from some reassuring inflation data and some comfort for the recently beleaguered retailing sector after an upbeat survey by the British Retailing Consortium.
The latter said high street sales in December were up 4.8 per cent on the previous year, compared with a 1.1 per cent gain in November and 5 per cent in October.
Economic news from the US yesterday, which showed inflation up 0.1 per cent was in line with market forecasts and posed no problems for Wall Street, which moved up more than 50 points not long after the opening.
But even after the good news, the FTSE 100 could still only muster a closing gain of 15.1 at 5,083.9, well below the day's best of 5,110.2, recorded shortly before the start of trading on Wall Street.
There were also gains across the second-liners and SmallCaps, with the FTSE Mid-250 climbing 16.9 to 4,816.5, well below its session high of 4,822.2. The FTSE SmallCap finished 10.9 higher at 2,340.1, only a fraction below the day's high.
Turnover in the market held up well, and was largely attributed to a big bought deal in GUS `A' shares, executed by two of the market's largest broking houses, Cazenove and Morgan Stanley.
The trade, which involved the placing of a 3.7 per cent stake in the retailer, accounted for around 10 per cent of overall market activity. At the 6 p.m. cut-off point, turnover in equities reached 864.4 million shares.
"I don't think a rise of 13 points represents much of a return of confidence in the market, especially after a fall of 170 points in two sessions," was the gloomy comment from a senior dealer at one of the big European securities houses.
The market's good start to the day came after the Dow Jones Industrial Average's remarkable turnaround overnight, which saw it transform a 137-point fall early in the session into a 66-point closing gain. That performance heralded a general surge in most of the Asian stock markets that have come under increasing pressure over the past few days.
The Asian advance was spearheaded by Hong Kong, up 7 per cent, Jakarta, 9 per cent higher, Singapore, up almost 8 per cent, and Tokyo and Seoul which were both up in excess of 1 per cent.
As well as the GUS placing, the retail sector enjoyed another session of keen interest as the spate of Christmas/new year trading updates continued.
The news was mixed, with Kingfisher propelled towards the top end of the FTSE 100 performance league on the back of a strong performance by its B & Q business, but Boots left languishing at the other end of the table after its update received the thumbs down in the market.
