Initially, shares greeted the Tory result with reservation. But then confidence grew. The ending, at least for the time being, of political uncertainty, a new-look Cabinet and signs of genuine investment buying did the trick.
Another impressive New York display, with the Dow Jones Average romping above 4,600 for the first time, a strong futures market and indications of a big buy programme also helped. So did growing hopes for lower interest rates in the US and Europe.
US investors could in the next few weeks provide the real power for the market. New York's remarkable run means they are experiencing increasing difficulty finding what they regard as realistic value.
They are turning their attention to overseas markets and London, which has lagged behind New York, must be offering the sort of value they are denied at home.
The market has been decidedly groggy since John Major's resignation. Even after yesterday's advance the index is still 9 points below its level before the leadership campaigns started to roll.
At one time the FT-SE 100 was above 3,400. It faded a little in the final 30 minutes. Government stocks managed gains of up to 19 ticks.
Glaxo Wellcome was one to miss the party. It fell 9p to 760p on worries about squeezed profits in Germany, where its Zantac ulcer drug is losing patent protection.
GEC's disappointing results left the shares 4p off at 305p and Compass, the caterer, suffered a 27p bite to 345p on its French acquisition plans.
Yorkshire Chemical tumbled 49p to 298p following a profit warning.
But blue dominated the proceedings. GRE, the insurer, was the best-performing Footsie constituent, up 12p at 216p. Wolseley, weak recently on the dull building outlook, was galvanised 13.5p higher to 366p on those US interest rate hopes.
Utilities were in demand with waters flowing strongly. Thames added 13p to 487p and Severn Trent 15p at 569p.
Electricities lost a little of Tuesday's enthusiasm but still moved ahead as political considerations mingled with expectations that Professor Stephen Littlechild, the industry regulator, will not be too harsh when he produces his pricing review tomorrow.
MFI, the flat-pack furniture group, gained 7p to 124p. James Capel expects a modest profit advance to pounds 69m this year but points out it would not require much of an improvement in sales and product mix to produce pounds 85m next year.
Thorn EMI jumped 28p to 1,343p as speculation about the sale of its music division resurfaced and Kwik Fit, the discounter, attracted late demand, gaining 17p at 674p.
Lonrho shaded to 151.5p as analysts continued to warm to the shares. William de Broe produced a buy note, suggesting assets could be 226p a share. Another enthusiast, T Hoare, estimated 219p.
Lucas Industries, the vehicle components group, moved ahead 5.5p to 197p on suggestions it could be the Footsie replacement for SG Warburg.
Boddingtons, the pubs chain, dipped 3.5p to 266.5p on Kleinwort Benson caution. The big brewers, it feels, are adopting a much tougher pricing approach, prompting it to clip pounds 1.5m from its Boddies forecast to pounds 31.9m.
Kleinwort believes discounts, particularly to the smaller wholesalers, are being reduced sharply. Bass, up 13p at 622p, no longer feels the need to chase market share. Gibbs Mew, which demonstrated on Tuesday the tightening conditions in the beer market, lost a further 38p to 383p, a two-day fall of 49p.
Aminex, the Irish oil group, due to move to a full listing today, held at 60p on the Irish exploration market. The biggest shareholder is Zarubezneft, the Russian government-owned oil company.
At 60p Aminex is valued at pounds 20m. Supporters of the Irish group point out that JKX, on its way to market with a capitalisation of around pounds 130m, has proven and probable reserves in the former Soviet Union of 31 million barrels. Aminex could soon have between 24 and 35 million. It is already producing and enjoys favourable Russian tax treatment.
VideoLogic's increased loss left the shares 10p down at 25p; Microgen, the computer group, jumped 20p to 149p on a 30 per cent profit increase.
Costain, the troubled construction group, rose 3p to 110p on the arrival of another Middle Eastern shareholder with 3 per cent.
Kelsey Industries, an audio accessories and roofing group, was the day's top performer, up 20.8 per cent at 505p in an exceedingly narrow market.
o Stirrings at United Energy, the USM-traded oil group. Big trades this week include the sale of a 4 per cent interest by former director Tony Alderton. There is talk of possible stake building with a view to a revamping exercise. It is thought Mr Alderton is keen to concentrate on Greenhills, a 4.2 traded company, where he is chairman. Greenhills is developing theme restaurants in central London with the US group Turner Home Entertainments and Baldwin, the holidays restaurants group. UE shares held at 12p and Greenhills at 18p.
o The next AIM recruit is Scruttons, an industrial services and shipping group. It is moving from the 4.2 market and dealings are expected to start today. The chairman is Sir Peter Parker, the former British Rail boss.Reuse content