The holiday mood continued in the London market with all the main FTSE indices setting new records, albeit in thin turnover. A dollop of takeover speculation helped keep matters interesting for those traders who bothered to make it in to work for the first of two sessions between the Christmas turkey and the millennium champagne.

Insurance group Royal & Sun Alliance chalked up a double-digit gain on rumours of a bid approach from Zurich Financial Services. And at the other end of the market, the best single performer was E-prime Financial, a recently-floated Internet group.

Wall Street set new records on Tuesday and kept moving ahead yesterday with the Dow Jones Industrial Average moving above 11,500. That, and the takeover talk, set the FTSE 100 index off to a good start with the blue-chip benchmark hitting a new intra-day peak of 6,860.8, up 54.3. It could not sustain those levels but still ended the day at a new closing peak of 6,835.9, up 29.4. The FTSE 250, up 28.6 to 6,415.5, and the SmallCap, up 11.9 at 3,076.1, were also at new highs.

Turnover at 5 p.m. was a modest 357.3 million shares.