It was a day of swirling rumours with claims that some leading players had suffered huge losses in the whirlpool of the futures market.
The dramatic surge in turnover, with Seaq recording 1.3 billion shares, supported the theory of desperate buying by desperate dealers.
The sheer volatility of Footsie in the past few weeks has been a nightmare for derivative players, big and small. It would not be surprising if heavy losses have been suffered in the futures minefield although market talk of almost fatal blows and mega-buck deficits are probably over the top.
One rumour suggested an overall industry loss of pounds 600m; it was later refined to a pounds 600m disaster for one house.
The rumour mill also churned out the story that an investment bank had trooped along to the Bank of England to ask for assistance in handling its losses.
And Gordon Brown added to the turmoil. Slipped quietly among his Budget measures was the removal of dividend tax relief on shares held for trading purposes. The shock move will cost the securities industry at least pounds 500m this year but perhaps much more. And more importantly, it appears to have left many of the more sophisticated, bespoke derivative contracts wrongly priced, forcing shares to be purchased to balance the risk.
They will have to be adjusted by agreement or, if that proves impossible, the securities house involved must take the hit.
There were angry claims that some of the finer points of the City's hugely complicated derivatives industry had not been taken on board by Westminster when framing the measure.
Such a chaotic backdrop made a nonsense of traditional trading. By common consent the market would open lower; it did - and then, to the astonishment of many, soared. Heavy futures trading spread to the cash market with often panicky buying of blue chips. The expected abolition of ACT exacerbated the confusion.
Suggestions market-makers, already suffering from short positions established ahead of the Budget, had to contend with a flood of overseas orders as foreign investors jumped in because of London's growing appeal merely piled on the agony.
Second and third liners again missed the party, underlining the blue- chip turmoil. The FTSE 250 index was up a mere 3.9 points and the FTSE SmallCap index 0.3.
The bewildering excitement prompted some strategists to pull back their Footsie forecasts. Dresdner Kleinwort Benson is keeping its year-end estimate at 5,000 points but Lehman Brothers has moved from 5,000 to 4,800. HSBC is sticking with 4,600 and ABN Amro Hoare Govett with 4,500.
The blue-chip leader board was dominated by retailers and utilities; the former enjoying the benign nature of the Budget and the later relieved by the scale of the windfall tax.
Tesco led the way with a 32p surge to 406.5p, followed by Railtrack, up 53p to 685p. At one time financials were the stars. Then came the stories of derivatives distress. Barclays had to settle for a 26.5p gain after being up 91p.
The fallers were mostly the great and the good of British industry, hit by sterling's strength and expectations it will move even higher. TI retreated 32p to 479.5p and GKN 49.5p to 959p.
General Electric Co was one of the few industrials to buck the trend. But its progress was put down to the departure of finance director, David Newlands, which is seen as the latest development paving the way for the merger with British Aerospace.
Lonrho lost 7p to 133.5p following JCI's option to buy the 27 per cent stake held by Anglo American. Merger talks were dropped this week. Option price is 155p.
ADT, the security group, jumped 310p to 4,225p as the merger with Tyco International was completed.
Universal Salvage softened 6p to 117.5p, a low. Pre-tax profits fell 26 per cent to pounds 3.42m. The shares were floated at 149p in August 1995 and went on to hit 286p.
Acorn, the computer group, slipped 1p to 172.5p; Olivetti, the Italian group, duly sold 14.71 per cent, cutting its stake to 16.49 per cent.
Barr & Wallace Arnold Trust advanced 31.5p to 293.5p after saying it had accepted a management buy-out bid of more than pounds 40m for its leisure side. The buy-out price is near BWAT's market capitalisation.Reuse content