HE astonishing overnight recovery by Wall Street, where the Dow Jones Industrial Average rallied from an earlier 78 point fall to end with a 53 point gain, transformed the mood of London's equity market yesterday.

And another buoyant start by Wall Street helped London and other European markets maintain their earlier strong performances.

Adding to the positive mood in London was a strong set of first quarter figures from Shell Transport, a handful of excellent market debut performances and good news from Scottish Power.

A sequence of five straight losses by the FTSE 100 index was brought to a halt Footsie ended the day a net 21.0 higher at 3728.3.

The big gains across the leaders did not filter through to the second liners which made a lacklustre showing and restricted the FTSE Mid 250 index to a mere 1.0 gain at 4505.4.

But senior dealers around the City were quick to point out the relatively low level of trading activity yesterday. They said most of the big market makers had been caught on the wrong foot by the big swing on US markets on

Wednesday evening.

The shift in the US was triggered by news that the Beige Book, published by the US Federal Reserve, included a reassuring assessment of inflationary pressures. This produced a massive swing in Treasury bonds, which rallied from showing early losses to close with gains of around 1% points.