Abbey National, the building society-turned-bank, set the ball rolling with its surprise mortgage reduction. The FT-SE 100 share index promptly switched from a 2.5 points fall to a 30.5 gain. It closed at 2,584.7, up 27.5.
Abbey's move - 'Do they know something we don't,' perplexed dealers pondered - came as the market was beginning to despair of any quick interest rate fix. It rekindled hopes of lower base rates within a few days and easier German interest charges. Another American reduction is also thought to be likely.
The Abbey move helped shares achieve the rare distinction of scoring six gains in succession. The advance has added 138.4 to the FT-SE 100 index.
But the new indices indicated that much of yesterday's action occurred in the front runners. The FT-SE 250 index was up only 7.9 at 2,410.9.
A sharp New York gain, which encouraged some US investors to shop in London, and the old story that an FT-SE 100 company is about to fall victim to a takeover bid, also spurred the late revival.
The blue chip takeover rumour is as old as the stock market. Occasionally the speculators are right. Lucas Industries, up 2.5p to 96.5p, and TSB Group, 2p to 137.5p, are the main names in the frame. TSB was also helped by suggestions that it was about to sell its Hill Samuel merchant banking offshoot.
GKN rose 13p to 373p on the back of bid rumours and indications it could win a consolation tank order from Kuwait. Reuters, another candidiate, jumped 18p to 1,282p.
The latest spot-the-victim game has been inspired by the Hanson offer for Ranks Hovis McDougall and Hongkong Land's assault on Trafalgar House.
Barclays de Zoete Wedd comforted the leading food retailers. Argyll Group put on 14p to 364p; J Sainsbury 17p 487p and Tesco 10p to 242p. Analyst Bill Currie pointed out that food price inflation is climbing again and he expects the trend to continue.
Drug shares were mixed. An Aids conference helped Glaxo Holdings 17p stronger at 791p but hit Wellcome, off 7p at 956p.
Power generators took a predictable knock as the industry watchdog ordered a review of charges. National Power fell 4p to 269p and PowerGen 6p to 280p. The Scottish generators and the English distributors made headway.
Hovering, seemingly unwanted lines of stock, depressed BICC, down 9p at 251p and Reckitt & Colman, 3p lower at 611p.
Allied-Lyons frothed 9p higher to 614p as County NatWest suggested the brewing deal with Carlsberg would soon be finalised, improving Allied's attraction. And Queens Moat Houses, the subject recently of heavy trading, edged up 1p to 38p. Hoare Govett believes the shares, 92p earlier this year, should be nearer 70p.
Ladbroke Group retreated 9p to 154p on a profit downgrade, thought to be by Kleinwort Benson.
Rank Organisation, weak on Monday, recovered to close 13p higher at 520p. But the group is growing short of City fans. County believes the shares are a sell. It draws attention to the disposal programme and says: 'The company is attempting to unbundle under the weight of Mecca acquisition debt - a point that will not lost on any potential purchasers.'
MFI Furniture slipped 4p to 113p. BZW cut its forecasts from pounds 55m to pounds 50m for this year and from pounds 80m to pounds 73m for next.
Owners Abroad, where a bidder lurks, eased 2p to 71p. A German group, Bayerische Vereinsbank, picked up 1.5 million shares at 78.2p.
Euro Disney advanced 50p to 860p on the disclosure it had attracted 7 million visitors, more than expected, in its first six months.
James Capel pushed Burmah Castrol 15p ahead to 648p. Cairn Energy rose 4p to 35p following a Louisiana gas find. Alliance Resources gained 1p to 10p on the departure of John O'Brien as chairman. He took over in May.
Henderson Administration improved 37p to 655p on the proposed acquisition of Touche Remnant.
A late rally left the FT-SE 100-share index up 27.5 points at 2,584.7. Earlier it had been down 7.7 points. The FT 30-share index rose 12.2 points to 1,891. But trading was moderate, with turnover at 470.5 million shares and 21,280 bargains recorded. Government stocks rose by up to a point.
Air London International, the air charter broker, is due to produce its year's results. A little- changed profit of pounds 1.2m seems likely. The recession has had a mixed impact on the company's trading. One area where it should have helped is the pressure on cash-stretched companies to charter, rather than use their own aircraft. The shares eased 1p to 68p yesterday.
Grosvenor Inns, which has a spread of 30 pubs, has had a sober time since it came to the unlisted securities market in May at 105p. Yesterday the shares drooped at 80p. But Panmure Gordon is enthusiastic. It expects profits of pounds 850,000 this year with a 4p dividend and pounds 1.1m next year with a 4.6p payment. The shares, it believes, are a buy.
ML Laboratories jumped 37p to 815p. Hopes are running high its Dextrin 20 kidney dialysis drug is about to win UK approval. An EC clearance is likely to follow. Tests on Dextrin started in 1984. In July ML raised pounds 16m to finance the drug's development. Haemocell shares have almost doubled to 174p since it won US approval for its blood filtration machine last week.