ANOTHER spectacular performance by the financial areas of the stock market drove the FTSE 100 index to new intra-day and record closes for the ninth straight session.
The index finished a day of increasingly frantic activity, especially in the banks, up 50.5 at a record close of 4,630.9. During the bank holiday-shortened week, it rose 175.3, or 3.9 per cent.
But once again the euphoric atmosphere in the financials did not encompass the rest of the market. The FTSE Mid-250, although closing 15.8 higher at 4,526.2, was only 0.6 per cent higher on the week. The SmallCap index added 6.5 at 2,308.1, leaving that index up 0.5 per cent on the week.
Leading shares have soared after Labour's victory in the election and its subsequent shock move to cede interest rate policy to the Bank of England, and to nudge the interest rate up by 25 basis points. Dealers have reported substantial overseas buying interest which was followed up by British institutions.
The move to shift interest rate policy to the Bank caught the London market completely off guard and was received enthusiastically as was the interest rate increase. Both moves seem to have been viewed by overseas investors as decisive, bold and indicating a determination to pursue sound monetary policies.
Yesterday saw brokers moving to increase their Footsie forecasts with Panmure Gordon, Lehman Brothers and UBS all hoisting their end-year targets, some as high as 5,000.
