A surprise slowdown in average earnings and the expected retail sales fall combined to alleviate higher interest rate fears, leaving the stock market free to feast on what has been described as a "pro-market" Budget.
New York's overnight strength and its steady display during London hours were other influences.
Footsie ended the session at its best level, up 68.7 to a 5,903.6 peak. At the start of the year it was 5,135.5. The mid and SmallCap indices also reached new highs.
But it was not joy for everyone. Tougher gaming tax ensured the chips were down for casinos. They were among the Budget losers. London Clubs International spun 35p lower to 232.5p and Capital Corporation lost 15p to 126p. Ladbroke, the subject of extensive speculation over a possible hotel deal on Budget day, shaded 1.75p to 336p and Stakis surrendered 2.5p to 118p.
Oils were also hit as the Government threatened to reshape the North Sea tax regime. Enterprise Oil fell 14.5p to 521p and Lasmo 4.75p to 267p. Shell gave up 6p to 416.5p but British Petroleum shrugged off an early fall to end 9p higher at 822.5p.
Granada, the leisure group, was among those closing at a high - up 7.5p to 994p. There was talk of more disposals with some suggesting announcements were imminent. Travelodge, the 160 chain of budget hotels, was one division said to be likely to go and there was growing speculation the group's effective control of the Savoy Hotel chain will end soon with a US chain moving in.
Kingfisher, on results, bounded 59p to 1,096p. It is also a beneficiary of the national insurance changes which helped the likes of Rank, up 18.25p at 378p, and Asda, 6p to 200.75p.
Wassall, one of the few remaining conglomerates, tumbled 39p to 328.5p after disclosing its intention to become a leveraged buyout group. It said its major institutions supported such a move but there was widespread unrest in the market. Chief executive Chris Miller said the change was an innovative way for conglomerates to tackle the underperformance of their shares.
Transport companies continued to advance on the fuel rebates for bus operators. National Express, figures today, improved 22p to 824.5p.
Unigate, the dairy group, added 10.5p to 700p after a positive investment dinner hosted by Henderson Crosthwaite at London's Ritz Hotel. Hazlewood Foods hardened 2p to 188p ahead of an analysts' visit today.
National Power went 7p higher to 589.5p as Salomon Smith Barney lifted its target price to 1,175p and Diageo held at 684p after Morgan Stanley suggested 750p which was topped by a Goldman Sachs 775p forecast.
British Vita, the chemical group, improved 10.5p to 275.5p after Credit Lyonnais Laing support.
Grosvenor Inns, up 3p to 247.5p, enjoyed a Merrill Lynch endorsement. The investment house accompanied its buy advice with profit estimates of pounds 1.9m for this year; pounds 2.9m for next and then pounds 4.5m.
Expectations of more telecom consolidation gave BT a 12.5p lift to 637.5p but Cable & Wireless eased 6p to 710p and Colt Telecom 80p to 1,550p.
Financials were back in form. Legal & General added 34.5p to 718p and Bank of Scotland's impressive run continued with a 26.5p gain to 730p. Rea Brothers, a small merchant bank, rose 7.5p to 62.5p after nearly doubled profits and an upbeat statement.
Wolseley, the building materials group, remained under the whip of its disappointing interim results, falling a further 16.5p to 435p.
Football scorelines had an impact. Aston Villa's Euro cup defeat pushed the shares down 27.5p to 632.5p but Sheffield Utd's surprise FA Cup success prompted a 7p gain to 43.5p.
Two newcomers got off to good starts. Hartford arrived on AIM. It is a clothing importer with a hospitality side. Mike Edelson, a Manchester Utd director who masterminded the reverse takeover by Conrad of Sheffield Utd. and then floated Prestbury, now a Nick Leslau vehicle, is behind what would appear to be an acquisitive venture. He has 27 per cent. The shares were placed at 2p and closed at 2.75p.
On Ofex it was the turn of K-Bar, a company running four late-night drinking venues, including one which opened this month in London's Wardour Street. The shares were placed at 10p and closed at 18.5p.
Claremont Garments recovered 8.5p to 60p after a Budget Day profits warning cut the shares 43p.Reuse content