European rate cuts power Footsie to record high; MARKET REPORT

Blue chips came close to breaking through the 3,900 barrier. The FT-SE 100 index closed at a peak, up 19 at 3,891.1, with hopes of lower interest rates providing much of the momentum.

There is a widely held belief that once Footsie climbs above 3,900 the magical 4,000 target would quickly fall.

This month, in admittedly unimpressive trading volumes, the index has climbed a remarkable 187.9. Often the stock market has looked taut and many experts have questioned the strength of the advance.

But unhelpful developments have been shrugged aside and the market has been content to dwell happily on more positive influences.

Yesterday it was the German interest rate cut. Other Europeans quickly followed. With the Bundesbank seen as having room for a further reduction and the Americans holding their rates earlier this week the chances of another UK cut have clearly improved.

The fall in retail sales in June, nipping hopes of a consumer boom, has also underlined the cheaper money argument.

The surge was not confined to blue chips. Second liners, as measured by the FT-SE 250 index, enjoyed another eventful session. The supporting index gained 15.1 to 4,402.5, taking its tantalising winning sequence to 17 sessions.

It is, however, still a long way from its record high - 4,568.5, hit in April.

Prudential Corporation, the insurance giant, had an active session, up 17p at 442p, with stories flowing about its Mercantile & General reinsurance arm. The Pru has said it intends to float M&G but some took the view the share offer would not take place - because the Pru had received a bid from another reinsurer which was too good to refuse. Another suggestion was that any flotation would occur much earlier than originally planned.

It had been thought M&G would be valued at around pounds 1.2bn in a market share sale with the Pru collecting pounds 500m whilst retaining a controlling stake.

BAT Industries was another active share - but it again headed south. The Clinton administration's move to classify nicotine as a regulated drug routed the price 24p to 422p, lowest for two years.

Hanson, planning to float its Imperial Tobacco group as part of its fourway demerger, has little representation in the US and any Clinton action would have little, if any, impact. The shares edged forward 3.5p to 162p.

BTR failed to respond to a buy suggestion from Panmure Gordon. The stockbroker expects the dividend to be cut next month - to 10.3p - but draws attention to a possible pounds 1bn disposal programme which should streamline and strengthen the group. The shares lost 3p to 250p.

Berisford, the Magnet group, was another in retreat - because of industrial action. A strike at its kitchen factory at Darlington lowered the shares 13p to 160p; they were 220p in June.

Zeneca, with a presentation rumoured, had another rousing session. In early trading the shares soared 24p. They closed 7p lower at 1,507p.

Ladbroke, up 2.5p to 203.5p, was helped by a Barclays de Zoete Wedd calculation the shares were worth nearly 250p.

Cable and Wireless, riding at 546p earlier this year as a BT merger seemed likely, gained 6p to 415.5p with a variety of rumours swirling round.

They ranged from an investment roadshow to an elaborate story that Granada could take on Cable's Mercury telephone network. Granada, up 6p to 857p, would then join the demerger bandwagon, splitting itself into two stand alone companies, one embracing leisure, the other media and telecommunications.

Interest rate considerations helped builders with the German cut encouraging RMC, up 23p to 1,075p, and Redland, 15p to 450p.

National Grid, responding to the Offer price proposals, gained 7p to 178p. Northern Electric glowed 16p to 544p, seemingly on dividend buying.

Albert Fisher, the food group, embarked on a round of investment meetings with a "no surprises" message. The shares were predictably unfazed, losing 0.5p to 45p.

Weir, the engineer, put on 18p to 234p as interim profits, although lower, came in above expectations but Dawson group reversed 41p to 125p following a 19.7 per cent interim setback.

Greenhills, the restaurant group, added 2p to 8p and Electronic Retailing Systems, AIM's only Nasdaq share, put on a further 15p to 218p; the shares of the group, supplying electronic shelf labelling systems for superstores, arrived at 145p in July.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Guru Careers: Communications Exec / PR Exec

£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral