At the close the index was up 26.3 points at 4,077.6; during the session it touched 4,100. Its previous peak, 4073.1, was achieved two months ago.
Although some of the glory faded the stock market was able to point to three rampant sessions which lifted Footsie almost 100 points.
Supporting shares were also in form with the FTSE 250 index ending up 41.6 at 4, 448.4, a three-day gain of 84.4.
Retailers were hit by renewed doubts about the strength of Christmas trading. Cautious trading statements from major Marks & Spencer suppliers, Claremont Garments and SR Gent, added to the anxiety that the festive season, after a bright start, had faltered and hopes it could represent the biggest spending spree since 1988 may be dashed.
Marks led the retreat, falling 11.5p to 472.5p. Burton lost 3p to 151.5p and Next 7.5p to 544.5p. Boots, Dixons, Great Universal Stores and Sears were others to miss the Christmas party.
Claremont said sales in the Christmas build-up were running below best expectations; Gent, reporting an pounds 11.1m loss, reported sales in line but margins feeling the pinch. Claremont fell 6p to 166.5p but Gent, which is in take over talks, added 2p to 59.5p.
Oils enjoyed some strong gains with Enterprise Oil bubbling 22p higher to 636.5p as analysts calculated the asset valuations implicit from the Gulf Canada Resources bid for Clyde Petroleum. Clyde edged forward 3p to 119.5p and Cairn Energy 5p to 411p.
The giants were in form with British Petroleum 11p firmer at 694p and Shell 12p at 994p.
Ramco Energy was the star performer, flaring 137.5p to 1,030p. It is to explore in Georgia and is planning an international offering of shares and ADRs to raise up to $115m. Aminex, which also has exploration and production interests in the former Soviet Union rose 3p to 65p. It is likely to announce further Russian developments in the new year.
Thames Water, largely on share buy-back hopes, spurted 18.5p to 607.5p. The water utilities are also drawing strength from expectations they will soon be subjected to the same intensive takeover speculation as electricities.
Severn Trent rose 8.5p to 692.5p; United Utilities 14p to 607.5p and Yorkshire 12.5p to 694p.
GKN, off 17p at 992.5p, remained under the whip of its legal setback in the US and Railtrack's exhilarating run came to an abrupt end, falling 5p to 393p following the strictures from its regulator.
Smith & Nephew put on 4.25p to 181.25p following an upbeat statement on the progress of some of its treatments.
British Aerospace climbed above 1,200p for the first time, gaining 24p to 1,209p, and Rolls-Royce was the best-performing blue chip, up 9.5p to 254p.
Premier Farnell improved 27.5p to 712.5p following a planned electronic components sale for $300m.
A rash of share tips for 1997 from NatWest Securities produced a round of gains with Pearson up 9p at 717.5p and Standard Chartered 13p at 711.5p. Arjo Wiggins Appleton, the paper group, put on 13.5p to 173.5p as ABN Amro Hoare Govett made positive noises.
Matthew Clark, the cider and wine group, fell under the influence of rumoured profit downgradings rather than takeover speculation, ending 3.5p down at 256.5p.
Memory Corporation, which repairs defective computer chips, continued to express relief at the completion of its pounds 1.36m cash raising exercise, improving 8p to 69.5p. The group placed shares at 45p.
Dalgety, the petfood group which hit a 298p low in October, edged further ahead, gaining 7.5p to 361.5p. Vague takeover talk persists with Nestle, the Swiss giant, the most popular predatory candidate. UBS support was another factor.
Aromascan advanced 6p to 85p on Mitsubishi bid speculation and Oxford Biomedica added another 5p to 70p and is now just 18p from its placing price. At one time the shares were down to 42.5p. Aquarius, the bathmats group, traded at 173.5p from its 166p placing.
ET, a financial group, slipped 2p to 145.5p as directors sold 5.7 per cent of the capital, pocketing more than pounds 4m. The sales were made at 140p a share.
r Emerald Energy, the oil tiddler with high hopes of a Colombian strike, has, as thought, attracted star names to its share register. GFM International has emerged with a 4.76 per cent stake; a fund related to SBC Warburg has 8.95 per cent and a NatWest small companies fund 3.65 per cent. The company raised pounds 7.5m through an institutional placing. The shares are 2.75p.
r Electronic Retailing Systems, the first NASDAQ company to arrive on AIM, rose 18p to 207.5p following an improved version of its electronic price labels for retailers. In the past six months the shares moved between 143p and 258.5p.
r Wyndeham Press held at 222.5p. Stockbroker Wise Speke forecast a pounds 3.1m profit jump to pounds 8.2m and says buy.