The stock market had already recaptured some of the confidence that had been draining away when the Government produced its ecu borrowing manoeuvre.
The impact was breathtaking. Shares more than doubled earlier gains and gilts soared nearly pounds 3 with trading becoming so frenzied that dealings, in an unusual move, were halted until the excitement subsided. At the close gilts were holding gains of about two points.
But, despite a 68.9-point gain to 2,381.9 by the FT-SE share index, shares did not put on quite such a rip-roaring performance. Although trading was the best for some time much of the upsurge was caused by short-of-stock market makers scrambling to cover their positions and indulging in defensive mark-ups. Even so the market's value soared by almost pounds 13bn.
Today, the last day of the account, could see shares pushed even higher in what could be squeezy conditions.
Equities were strong from the start of trading. As it became apparent that the rush of company results was free of shocks, and indeed contained a few pleasant surprises, prices advanced. The German Bundesbank reinforced the growing confidence by announcing, not unexpectedly, a no-change stance on interest rates.
Then out of the Whitehall hat came the ecu borrowing, seen as giving the Government a war chest to protect sterling and at the same time reducing demands on the gilts market, thereby benefiting equities. Sterling strengthened and the whole exercise should, at least in the short term, remove pressure for higher interest rates.
Double-figure gains occurred over a wide front. Electricities and waters, the investment havens when the market was tumbling, were stuck on the fringe of the party. Recovery shares were the order of the day.
Imperial Chemical Industries, as befits the accepted bellwether of the UK's industrial wellbeing, mirrored the trend with a 35p gain to 1,106p.
British Airways continued to fly higher as US airlines increased their fares, giving the UK carrier more freedom to improve its margins. The reported interest in acquiring a minority stake in a French regional airline also helped sentiment. The shares climbed 18p to 252p. BAA, the airports group, rose 13p to 665p.
P&O was another transporter on form. The market has become convinced that the dividend, once regarded as under threat, will be held. The shares rose 24p to 358p.
Williams Holdings, despite lower profits and reduced market forecasts, rose 17p to 247p. There is, it appears, little likelihood that it will attempt the rumoured acquisition of the Thorn EMI security division, which is known to be up for sale.
The general euphoria failed to halt the steady flow of profit downgradings. County NatWest reduced its expectations for the chemical group Courtaulds and Hoare Govett added its influence to the stream of Tate & Lyle reductions.
Courtaulds, however, spurted 20p to 438p but T&L slipped 1p to 293p.
MB-Caradon, the building products and packaging group, recovered an early fall as the market scented that a buy recommendation was about to be issued. The shares ended 10p higher at 218p.
British Petroleum's recent firmness continued with the shares up 5.5p to 201p. The sale of its remaining Australian interests is expected soon.
The upsurge towed some of the demoralised shares higher. Lucas Industries, helped by the T&N results, put on 7p to 89p; Trafalgar House reclaimed 3.5p to 48p and Forte advanced 8p to 134p.
MTM, with interim results next week, continued to strengthen, rising 5p to 35p. Euro Disney, helped by management changes and an expected trading statement that is likely to be moderately favourable, advanced 40p to 845p.
But it was not all one-way traffic. Rolls-Royce fell 4p to 128p in response to its interims and Iceland Frozen Foods dipped 16p to 485p following its results.
Excalibur, the engineering and jewellery group, stuck at 13p, seemingly unimpressed by Standard Life acquiring 1 million shares, lifting its interest to 4.9 per cent, and Michael Griffiths, chairman, buying just over 2 per cent to go to 10.85 per cent.
The Griffiths buy highlighted the difficulty of dealing in small companies.
He acquired the additional shares at 8p each in a deal negotiated by SG Warburg.
The FT-SE share index surged 68.9 points to 2,381.9 yesterday. At one time it was up 71.3. The FT 30-share index rose 58.2 to 1,741. But there was no buying stampede. Turnover reached an unexciting 551.3 million shares with 20,844 bargains recorded. Government stocks were about pounds 2 higher.
Dalgety, the food group, jumped 17p to 396p, the best performance in the currently out-of-favour food manufacturing sector. Behind the confident display was a market story that Dalgety was near to unloading its baking and milling operation which, like its rivals, has found the going tough. An Irish group was said to be negotiating to buy the businesses.
Directors' share-buying, particularly involving small companies, is eagerly followed. CMW Group trebled when its directors moved into the market. Now it may be the turn of the marketing consultants Holmes & Marchant. Following a 400,000 purchase by Emyr Jones, finance director, John Holmes, chairman, has acquired 360,000 at 8.5p. The shares rose 4.5p to 12.5p.
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