Share prices in the first session of the account took their cue from the futures market which, as it did on Friday, raced ahead in early dealings.
The FT-SE 100 share index climbed 24.4 points to 3,135.8. Gains made lower down the ranks, though, were less marked: the FT- SE Mid, covering the next 250 stocks, rose 11.1 to 3,466.
Scant regard was paid to the heavy overnight falls in Tokyo, where the Nikkei average dropped 647.66 to 16,078.71, and in Hong Kong, which saw the Hang Seng plunge 261.65 to 9,012.77.
London's buoyancy owed much to the conviction among investors that today's Budget will see lower-than-expected tax increases.
Longer-dated gilts increased by half-a-point, aided by the continuing fall in oil prices that helps keep the lid on inflation.
Oil shares, generally, lost more ground. Shell dipped 12.5p to 665.5p, and BP slipped 8p to 325.5p.
Among the sectoral gainers, television, stores, drinks, building and leisure shares performed particularly well.
Television shares, lifted last week by the Government's relaxation of merger rules, were boosted further by the agreed pounds 624m takeover bid by Carlton, up 30p to 797p, for Central, which surged 405p to pounds 25.73.
Speculation about the next television takeover target lifted LWT, in which Granada has a 20 per cent stake, 45p to 579p. Granada rose 13p to 463p.
In leisure, Rank Organisation was driven up to 895p at one stage on talk that it would sell its 49 per cent stake in Xerox. The shares, however, failed to hold that advance and closed just 7p higher at 883p.
Ladbroke, weaker of late, had a better session and firmed 4p to 166p. First Leisure hardened 2p to 258p.
Hopes of another reduction in interest rates provided some cheer for the builders and related issues.
Among the house builders, Wilson Bowden added 4p to 422p, Bryant rose 3p to 148p, and Berkeley Group improved 5p to 436p.
In building materials, Rugby finished 3p better at 287p, RMC gained 5p to 893p, and Newman Tonks closed 6p higher at 159p.
Stores also fared well from the interest rate hopes. Notable gainers were Courts, ahead 19p to 843p, Argos, up 10p to 348p, Boots, also 10p ahead at 544p, and Kingfisher, 12p better at 679p.
QS sprinted 35p to 225p on an upbeat trading statement. Neil Wanstall has been appointed managing director, replacing Marc Walters, who will remain chairman.
Glaxo improved 16p to 671p, ahead of the company's research and development report to analysts this week.
United Newspapers featured among the speculative movers, rising 12p to 539p. There was one rumour that the company had at last agreed a sale of its Extel Financial subsidiary.
VNU, the Dutch media group, last week withdrew from the bidding for Extel, saying the asking price, said to be pounds 70m, was too high.
Pearson, owner of the Financial Times, is seen as the most likely buyer for the news-wire and data agency. Industry observers feel, however, that Pearson might run into problems with the competition authorities.
On a different tack, Pearson rose 12p to a 1993 high of 596p as dealers became less convinced that VAT would be slapped on newspapers in the Budget.
Mirror Group gained 3p to 154p, and the Telegraph group finished 1p better at 375p.
Shares in the drink companies, which are in the middle of the reporting season, also benefited from a view that the Budget may prove less harsh than feared.
Bass, due to report tomorrow, advanced 14p to 493p, and Grand Metropolitan, with figures out on Thursday, increased 19p to 409p.
Merrydown, though, missed the boat despite a big increase in interim profits. Shares dipped 8p to 218p.
A profits downgrade by analysts at Cazenove clipped 11p from BBA to 188p. The blue-blooded stockbroker is said to have lowered its profits forecast for this year from pounds 60m to pounds 53m, and by pounds 10m to pounds 65m for 1994.
British Vita eased 1p to 237p amid talk of an imminent sell note from one broking house.
Insurances pushed further ahead as concern about pension tax relief changes continued to recede. Commercial Union, which hit 614p at one time, closed 4p better at 607p. General Accident also failed to hold early gains, but still advanced 14p to 647p. GRE added 10p to 207p.
Elsewhere, Control Techniques climbed 16p to 345 after its 47 per cent profits advance.
Kalamazoo's return to the black was greeted with an 11p mark-up to 99p.
Share prices made strong advances yesterday amid brisk trading. The FT-SE 100 share index closed at 3,135.8, an increase of 24.4 points. An 11.1-point rise to 3,466 was recorded by the FT-SE Mid. Account ends on 10 December and settlement is on 20 December.
Shares in Dorling Kindersley, the publishing group, had a rough time, falling by 29p to 293p. Damage was caused by Peter Kindersley, chairman and chief executive, telling the annual meeting that distribution problems had arisen following the installation of a new computer system. Despite that, he said trading at the group, floated at 165p last year, was strong.
BZW have turned positive on Powell Duffryn. The investment house says Powell is bringing through a recovery rate of profits growth with no external help. Recent interim figures were ahead of most analysts' expectations, with profits before tax and exceptional items increasing from pounds 9.4m to pounds 14.2m. The shares, which went ex-dividend yesterday, closed 2p off at 613p.
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