Takeover stories continued to drive London shares higher yesterday, thanks to a FTSE 100 bid, another in the FTSE Mid-250 and action across the smaller stocks.
The FTSE 100 index rallied after an uncomfortable start to the day, caused by intermittent flurries of profit-taking, to end 13.8 up at 5,612.8, taking its sequence of record closing highs to five and its run of gains to seven.
It was the hostile bid for Argos, the catalogue shopping chain, from Great Universal Stores, that captured the stock market's imagination, igniting a retail sector that has mostly under-performed the wider market over recent years.
An increased offer for Energy Group, from Pacificorp, the US utility company, had been expected, as had the offer from Australia's AMP for Henderson, the fund management group. Among the smaller companies there was an agreed bid for Gibbs Mew, the pubs group, from BO]Enterprise Inns and a bid approach for Beales Hunter, the electronics company.
The bid action in the market offset a fairly hefty dose of profit-taking in the pharmaceuticals arena, which triggered Footsie's 140 point leap on Monday when the market had its first opportunity to react to the proposed merger of Glaxo Wellcome and SmithKline Beecham.
For a change the FTSE 250, inspired by the massive rise in Argos, captured the limelight, pushing up 37.5 to 4,915.9. That gain brought the Mid-250 index to within 50 points of its previous record closing high of 4,963.8, set in mid-October last year.
The Mid-250 index includes several high street retailers, many of which moved higher in sympathy with Argos yesterday. It also includes most of the large house builders, which made rapid progress in the wake of exceptionally good results from Bryant Group.
The leaders, on the other hand, had to cope with bouts of often heavy profit-taking from domestic and international institutions, which have been carrying overweight positions in the pharmaceuticals sector for some time. Banks and insurance stocks suffered from the same kind of selling pressure as the drugs stocks.
The FTSE SmallCap index rose 3.9 to 2,388.6, not far short of a the day's best of 2,389.0, helped along by actual and rumoured takeover stories.
The market now enters a period of genuine uncertainty, awaiting decisions on interest rate policy in Britain, the US and Germany, and is also poised to react to Friday's non-farm payroll report from the US. Few expect rate changes in either the US or Germany although some fear that the Bank of England's monetary policy committee could yet raise British rates.
Turnover in equities was 885.6 million shares, of which just under half was in non-Footsie stocks.
