London shares have moved firmly above the key 4,500 support level as the FTSE 100 Index stood 34.7 points ahead at 4511.6 by lunchtime.
WHSmith sent retailing stocks into a spin by warning of a profits shortfall after disappointing festive sales, but market optimism about prospects for 2004 appeared to outweigh short term jitters.
Banks took advantage of the positive mood, with Standard Chartered rising 12.5p to 935p, HSBC putting on 14p to 892p, Lloyds TSB advancing 6.5p to 454.5p and Barclays moving 5.75p ahead to 504p.
Some analysts have predicted that the Footsie could hit 4,980 during the year if concern about terror attacks goes unfounded. Economic news buoyed spirits, with the Bank of England saying Britons spent a record £11.56 billion on their credit cards during November.
The Chartered Institute of Purchasing and Supply contributed to the upbeat mood with figures showing that manufacturing grew at its strongest rate for four years.
On a thin trading day, WHSmith lost 12 per cent or 34p to 241.5p after becoming the first high street retailer since Christmas to update the market on its festive performance. It braced investors for profits "materially below current market expectations" after flat like-for-like sales for the 17 weeks to December 27th.
Shares in Dixons followed suit, topping the Footsie fallers with a 1.5p dip to 137.5p. Safeway was 1.25p down at 282.75p while rival supermarket group Morrisons dropped a penny to 225p. Marks & Spencer limped into the black after spending most of the morning in negative territory, rising 0.5p to 289.5p.