Footsie has 4,000 mark within its sights once again

A late buying surge pushed the Footsie to another record closing high and to within a whisker of the 4000 mark, helped by strong gilts and futures markets and benign economic data from the US.

The index of leading shares closed at 3992.2, up 38.5, as traders took their cue from a downbeat report from US purchasing managers that seemed to vindicate the Federal Reserve's recent decision to leave interest rates unaltered.

Volumes were nothing special, but many traders are convinced the 4,000 mark will be broken this week as cash-rich institutions seek to invest their money somewhere.

Imperial Tobacco could not have picked a better day to begin its demerged life outside the Hanson group.

The shares had been expected to open at around 375p-380p, but they celebrated their debut in the blue-chip index by closing at 393.5p, above their grey- market price last week. A hefty 14 million shares changed hands.

The strong showing from Imperial lifted shares in BAT Industries, which finished 6p better 431.5p. Hanson, shorn of both Imperial and Millennium, the Grimsby-based but New York-quoted chemicals business, fared less well, dipping 0.75p to 94.5p.

Vickers had an eventful session. The shares soared to 297.5p in early exchanges amid rumours that BMW was about to buy its Rolls-Royce luxury cars unit.

In the event BMW issued a statement saying its Rover division and Chrysler had formed a 50:50 joint venture to invest $500m in a new engine plant in South America. Vickers fell back sharply to close just 5p better at 288.5p.

Other engineering and defence-related stocks were also in demand, with Smiths Industries up 16p to 808.5p and TI Group 11p to the good at 593.5p while GKN added another 27.5p to close at 1149p on further consideration of its German helicopter deal.

But the biggest winner in the sector was Cobham, whose shares soared 37p to 669.5p in late trading on news that the Ministry of Defence had selected its FBS joint venture as the preferred bidder for a 15- year programme worth more than pounds 400m to provide aircraft and personnel for a new defence helicopter flying school.

FBS is an equal joint venture between FR Aviation, a wholly owned unit of Cobham, Bristow Helicopters and Serco. They will supply 38 Eurocopter AS350BA Squirrel single-engine and nine Bell 412 twin-engine helicopters. Serco's shares moved 6.5p higher to 615p.

Still in the skies, hopes that British Airways' proposed alliance with American Airlines would get regulatory approval gave the shares wings and they rose 14.5p to 556.5p.

There was plenty of buying ahead of companies reporting today. Bank of Scotland caught the eye, advancing 8p to 255.5p ahead of this morning's interim results. Pre-tax profits should come in around pounds 300m versus pounds 262m.

Elsewhere in financials, shares in National Westminster Bank gained 13p to 692p after ABN Amro Hoare Govett issued a buy note citing domestic cost-cutting measures and last month's debt securitisation.

Plant hire group Hewden Stuart saw further buying ahead of its interim results today. NatWest is looking for pre-tax profits of pounds 15.0m versus pounds 19.7m last time and rates the shares, up 5p at 135.5p, a buy for an eventual recovery in UK demand.

Further proof that there is no argument with a wall of money came yesterday when highly-rated pubs group JD Wetherspoon hit a record high on renewed American buying interest. One large US fund, Janus, now speaks for almost 20 per cent of the shares which added another 59p to 1109p. Bid talk has also resurfaced. Following last week's pounds 96m acquisition of the Tom Cobleigh pubs chain by the revamped Rank Organisation, some investors feel it is only a matter of time before Wetherspoon loses its independence.

In chemicals, Courtaulds was weak as SBC Warburg changed its recommendation to hold from buy after the stock breached the broker's 480p price target. The shares fell 2.5p to 478.5p.

Job cuts and big losses at department store group House of Fraser sent the shares tumbling 4.5p to 158p. But the real dog of the day was that old stockpickers' favourite, Pan Andean Resources. The shares collapsed by 74.5p to 40.5p on news of a drilling report that showed a potential oil well in Bolivia to be dry. US investors in particular are said to have got their fingers burnt. Last night Pan Andean played down the prospects of launching a rights issue to fund the rest of the drilling programme.