A huge fall in the US deficit in August boosted the dollar, but there was also good economic news from this side of the Atlantic. Dealers drew comfort from sluggish UK retail sales data and no sign of any acceleration in underlying earnings, which are deemed likely to give the Chancellor, Kenneth Clarke, more room to cut base rates in the forthcoming Budget. The feeling was reinforced after the Confederation of British Industry's director-general, Adair Turner, said that the next movement in UK rates should be downward.
Shares soared to a new all-time closing high on the stock market yesterday, powered by better-than-expected economic data and a renewed frenzy of takeover speculation. The FT-SE 100 index ended 30.8 points up at a new closing peak of 3,593.0 by the end of trading.