A vigorous rally helped by some better-than-expected economic news took the FTSE 100 index back to the top of its recent trading range yesterday. The blue chip benchmark closed with a gain of 102.0 to 5,188.6, leaving it 3.4 per cent higher on the week.
Wall Street's rally late on Thursday, with the Dow Jones Industrial Average closing more than 100 points ahead after a 160-point fall in early trading, helped get the day off to a buoyant start.
Then came figures for the UK's third-quarter GDP growth, which showed a stronger-than-expected 0.6 per cent quarter-on-quarter rise. That brought reassurance to those who feared that the UK might be close to recession. Activity was bolstered by the services sector, which rose 0.8 per cent during the quarter.
"These numbers provide a strong cushion for growth in the second half, with the annual rate of growth now unlikely to fall below 2 per cent," said Robert Jukes of Credit Suisse First Boston.
The FTSE 100 index gathered strength in late trading, helped by some of the heavyweight stocks such as BP and Shell. Technology stocks also had a good day, with Sage leading the list of Footsie performers.
Not all was bright in the market yesterday, however. A profits warning from Wilson Connolly, accompanied by the resignation of its chief executive, cast a pall over the housebuilding sector.
The company said that the number of people making reservations to buy new houses had dropped. At the overall market level, investors seem to be ignoring the bad news in the short term and concentrating on the prospects for recovery in 2002.
Mike Lenhoff of Gerrard Limited said that "profit warnings are coming through thick and fast daily, with almost no businesses committing to a prediction for the rest of this year".
"If companies have no idea what will happen in their markets in the next 10 weeks, then what confidence we have in projections for the next 12 months? We have an inexorable link between the military action and uncertainty over corporate profits; until this is resolved, it is practical to assume that the recovery in markets is close to running its course."
Turnover was 2.06 billion shares by the 6 p.m. count, with Vodafone, Marconi and Invensys the most heavily traded stocks.
