The main driving force behind Footsie's romp was another raft of strong company results, and a emerging belief that the Bank would not increase base rates today even though recent economic date points to the need for a further hike in the cost of borrowing.
Thoughts of a delay in raising rates were clearly evident on the foreign exchanges. Sterling fell to 3.01 against the German mark, down around 5 pfennigs.
A batch of exporters revelled in sterling's decline, with the likes of TI Group, up 20p to 574.5p, putting on a spurt. Other companies that have been hit by the pound's strength in recent weeks included Reuters, which closed up 23.5p at 686.5p, and Reed International, which reports results today, ending the day 18.5p better at 630p.
GKN benefited not only from the pound's antics but also its better-than- expected results. It was among the best Footsie performers, up 70p at pounds 11.56. The company was helped by positive sentiment from SBC Warburg, which set a target price of pounds 12, and buy notes from Charterhouse Tilney and Credit Lyonnais.
GEC followed on GKN's heels, adding 18p to 379.5p, despite news that an executive director and former trade minister, Sir Richard Needham, was to leave. However, the defence electronics group was buoyed by news that GEC Alsthom's energy transport and distribution division had received a large order for an electric turbine.
While investors were busily buying former sterling casualties, retailers and utilities - domestic stocks safe from the effects of a strong pound - were decidedly out of favour. Tesco, which had been wanted earlier in the week, dropped 6.5p to 427.5p, and Asda followed suit despite a buy note from Hoare Govett, losing 1.25p to end at 145p. Sainsbury - off 2p to 435.5p - and Safeway - down 1.5p to 392p - did not fare any better. WH Smith was preferred, up 8p in early trading, and closed up 5p at 354p. Well-worn rumours of a takeover resurfaced, with one follower describing the retailer as a "sitting duck".
National Power led the Footsie fallers though, off 15p at 524p, and PowerGen dropped 5p to 708p. Water stocks were again looking washed out, with Thames Water, poorer by 8.5p, closing at 776.5p. Severn Trent was also trickling away, losing 15.5p to 834.5p
Oil and water certainly did not mix yesterday, as oils continued their rally after British Petroleum's results earlier in the week. BP, encouraged by buy advice from Societe Generale and BZW, jumped 30p to 891.5p, and Shell, due to report today, rose 15p to 473p.
Buyers were supping up Cadbury Schweppes, up 16p to 611.5p, after results roughly in line with expectations. However, analysts were not unanimously in favour, with Hoare Govett saying it was undervalued, but Societe Generale advising investors to reduce.
Two banks reported interim results yesterday, Standard Chartered and the Woolwich. Both met City expectations and Standard rose 32.5p to pounds 10.38, while Woolwich added 5p to 297p. Barclays was back in favour again, richer by 50p to close at pounds 13.28; and HSBC Holdings continued its heady ascent, up 57.5p to pounds 23.09. Halifax was less in demand, sliding 1.5p to 736.5p after NatWest changed its recommendation from hold to reduce.
First Leisure, the bingo to nightclubs group was also in the doldrums, losing 9p to finish the day at 296.5p. Merrill Lynch has advised investors to reduce, although an analysts' visit next Thursday could help to revive the stock.
Petra Diamonds, the mining group which is quoted on AIM, ended 7p better off at 115.5p, after announcing that it had won 10,000 square miles of diamond concessions in north-eastern Angola.
Vocalis, the voice recognition and call processing specialist, improved 6p to 64.5p after signing deals with nine telecoms equipment suppliers.
Viglen Technology, the personal computer group spun off from Amstrad, continued to languish, down 3.5p at 61.5p. And the purchase of two Kiss dance stations by radio group Chrysalis failed to woo investors. The stock closed off 3.5p at 562.5p. Network Technology, the AIM-quoted network connectivity specialist, which announced that it had applied for admission to the full market, closed unchanged at 162.5p.
While blue chips are basking in sunshine, there is a dark cloud hanging over some of the small technology stocks. Fibernet Group is a case in point. The company, which supplies and installs electronic networking equipment, optical fibre and copper cabling systems, reached a year high of 184.5p in the spring, but closed down 4p at 116.5p yesterday amid growing concerns over earnings growth for the sector.
Dealings in Meltek Group were suspended at 40p after the company, which provides computer support services, said receivers would be appointed to wind up its Webb Corporation division. Meltek bought Webb in December. Meltek said in May it would announce a "significant loss" for the first half of the year to the end of June because of a difficult trading environment.Reuse content