Best levels were not always held, largely due to a surprisingly subdued New York opening and the inevitable profit-taking.
But the FT-SE 100 index ended 21.1 points higher at 3,440.2 and the supporting FT-SE 250 index jumped 54.5 to 4,131.6. Trading was busy with extensive overseas interest. Turnover again exceeded 1 billion shares.
At one time the FT-SE 100 index was up 52.6, reflecting unexpected joy over the modest interest rate reduction. Further moves are expected. The more optimistic expect the Chancellor to indulge in staggered reductions, perhaps a quarter of a point at a time, to bring the rate down to 4.5 per cent in the summer.
Government stocks were hit by strong selling of the long gilt future, with the US investment house Goldman Sachs doing much of the damage.
On the corporate front Granada, as widely forecast, lifted its offer for LWT (Holdings); GKN at last descended on Westland, the helicopter group, and Sheffield Insulation bid for Freeman, another insulation group. The three shots put values of nearly pounds 1.3bn on the target companies.
The increased Granada bid, quickly rejected by LWT, pushed other broadcasting shares higher. The loss-making Yorkshire-Tyne Tees TV, the market's favourite candidate for the next television takeover saga, gained 26p to 298p. Scottish TV rose 12p to 551p.
But Carlton Communications missed the excitement, dipping 1p to 1,012p on talk of a big line of stock seeking a home.
Granada slipped 2p to 568p and LWT jumped 35p to 737p. GKN was 2p firmer at 582p and Westland rose 2p to 307p (after 313p). Sheffield improved 18p to 288p and Freeman rose 22p to 242p.
Reuters, up 60p to 1,971p, responded to profits in line with expectations and a four-for-one share bonus.
Some big agency crosses went through. Wickes, the builders merchant, shaded 1p to 121p on a 5.9 million deal; Medeva, the drugs group, fell 4p to 157p following a 2 million cross at 152p.
Argyll, the Safeway supermarket chain, edged ahead 3p to 261p. It is expected to make a trading statement on Monday. Tesco, after a meeting with fund managers in the North, rose 2p to 221p. Asda was weak, off 1.5p to 57.5p.
Nurdin & Peacock gained 10p to 213p in response to its pounds 10m scheme to increase the use of its cash and carry warehouses.
Eurotunnel lost 18p to 575p on the delay in the Le Shuttle freight service. P&O was consequently marked higher, up 6p to 711p.
BOC fell 11p to 697p ahead of tomorrow's quarterly figures.
Builders and building material groups were among the main beneficiaries of the rate cut. Barratt Developments gained 12p to 288p; George Wimpey 11p to 241p.
Blue Circle Industries was prominent among the material groups, rising 9p to 373p. Blockleys' speculative run continued, up another 3p at 86p.
Tex, a piling equipment and plastic components group, held at 47p. The shares should go lower today. After the market closed, the company warned that the year's profit would fall below expectations. Rothmans advanced 19p to 462p as SG Warburg signalled the shares were a buy.
The engineer James Wilkes spurted 29p to 168p as the market awaited the expected bid move from 29.53 per cent shareholder Suter, up 5p at 215p.
British Petroleum, due to report the year's results tomorrow, moved ahead 7p to 385p in a firm oil sector. NatWest Securities is looking for pounds 910m against a pounds 352m loss.
Pentos, the hard-pressed retailer, weakened 3p to 29p on reports it is seeking to have its rent payments staggered.
Stakis celebrated its elevation to the FT-SE 250 index with a 6.5p gain to 92.5p.
Owners Abroad was lifted 1p to 100p. Figures are due today; there is speculation they will be accompanied by a rights issue.
Forte's surprise failure to capture the Italian Ciga hotels chain lowered the shares 6p at one time. They closed 3p down at 252p. The British company had formed a partnership with the international investor George Soros to undertake the deal.
Lloyds Abbey Life, another reporting today, rose 18p to 462p. The insurance group is expected to announce interim figures of pounds 312m, up from pounds 297.6m.
Essex Furniture, up 4p at 249p, has called in Granville Davies as its stockbroker, replacing Williams de Broe. It is due to report interim profits later this month. The market is looking for pounds 700,000 against pounds 619,000. But with more profit coming in during the second six months than in the past, the year's figure should come out at pounds 1.5m compared with pounds 1.088m.
Burndene Investments edged ahead 1p to 51p. There is speculation that it plans to strengthen its most profitable operations, caravan manufacturing and caravan parks. Any such expansion could be funded by the sale of other parts of the business. The hosiery side, it is estimated, would fetch pounds 10m and land in Florida and the Cayman Islands could be worth pounds 15m.
Expect takeover action soon at Business Technology, the office equipment group. Alan Baldwin, the ex-Securiguard chief who replaced Tony Berry as chairman, is thought to have a significant deal near completion. BT is likely to emerge as a Securiguard Mark Two, covering such business services as cleaning, distribution and security. The shares held at 14.5p.
The FT-SE 100 index closed 21.1 points higher at 3,440.2, with the FT-SE 250 index up 54.5 at 4,131.6. Turnover was 1.02 billion shares from 41,177 deals. The account ends on Friday, with settlement on 21 February. Gilts fell by up to half a point.Reuse content