SOLID gains across overseas markets and a sprinkling of positive company news yesterday helped London blue chips claw back some of their recent losses but volume was thin as many investors remained on the sidelines until the direction of global interest rates becomes clear.
By the close of business, the FTSE-100 benchmark index had gained 51.6 points to 5877.8, having at one stage been as high as 5895.6.
''There have been a few encouraging company statements and a few bids in the broader market, and that has helped sentiment as a whole,'' said a senior City stock trader.
A strong performance by financials and supermarket group Sainsbury helped leading shares cut Monday's 90-point deficit. Second-liners, however, managed only a marginal gain with the FTSE-250 index closing 2.7 points firmer at 5795.2.
Gilts brushed off a leap in inflation to end higher. June futures rose by 11 basis points to 107.78.
Shares in British Biotech started their long climb back to former levels after the resignation of chief executive Keith McCullagh.
The group picked up 3p to 65p, only to fall back again by 3p to 59p as analysts digested the documentation.
But it was the aircraft engineering sector which provided one of the most impressive gains of the day, with the #267m bid offer by TI Group for EIS, listed on the FTSE Small Cap index.
EIS shares soared by 154p to 500p - a gain of nearly 45%. TI Group fell 16p to 587p as some dealers balked at the price.
Sainsbury became a late gainer of the day as it announced the sale of its entire stake in US company Giant Food. The group gained 34.5p to 515.5p.
The retail sector had a bullish day after Next reported that it was over the worst of the troubles reported in an earlier profits warning and surged 33.5p to 521p.
Jeweller Goldsmith said like-for-like sales were up 10% in the first 15 weeks of the year. Its shares sparkled with an 11.5p gain to 290p.
Supermarket group Asda grew by 3.5p to 184p on general positive sentiment and the hope of a future merger.
Insurance group Royal & SunAlliance put on 15p to 654p after pre-tax profits came in around expectations after a fairly harsh winter of claims.
Elsewhere among the financials, Far East-linked HSBC took heart from a rally on the Japanese markets, driving 15p ahead to 1663p, while Lloyds TSB added 30.5p to 864p, followed by NatWest up 3p to 1131p.
Flat results from brewer Greenall left shares down a stale 14.5p to 487p.
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