The FTSE 100 Index built on momentum sparked by the US presidential election results to close at its highest level in 28 months today.
After a lacklustre session in which many stocks fell victim to profit takers, the Footsie was boosted by a late rally to stand 9.8 points higher at 4728.3.
Although insurers and pharmaceutical stocks were out of favour, strong corporate updates by groups including Smith & Nephew helped to move the market higher.
The decision by the Bank of England to keep interest rates on hold at 4.75% had been widely expected by analysts and had little impact on the Footsie.
New York’s Dow Jones Industrial Average also shrugged off the threat of profit taking, standing around 40 points higher by the end of the session in London.
In London, medical devices group Smith & Nephew was the highest climber, rising 10% or 48.5p to 517p, after it posted third quarter results ahead of expectations and said it was optimistic about prospects for 2005.
Oil companies also lifted spirits as the price of a barrel of crude in the US remained above 50 US dollars. BP rose 9p to 542p and Shell added 5p to 435.75p.
But some of yesterday’s biggest climbers lost out, including drugs company GlaxoSmithKline, which fell 5p to 1188p, while rival AstraZeneca was unchanged at 2319p.
Elsewhere in the sector, Shire Pharmaceuticals was another heavy faller as news that third-quarter profits rose 8% failed to budge shares, which lost nearly 4% to end 20.75p lower at 519.75p.
Among those reporting results, Scottish & Southern Energy was in the red – off 3.5p to 826.5p – as traders failed to warm to an 11% rise in half-year profits.
Outside the top flight, shipping group P&O saw its stock fall 2p to 268.25p after failing to report an improvement at its troubled ferry business.
Hotels group Millennium & Copthorne slipped 2.25p lower to 334.25p after saying third-quarter profits doubled to £13.3 million as it continued to recover from the travel industry downturn.
Retirement housebuilder McCarthy & Stone failed to cheer the market with a 27% hike in annual profits. Shares dropped 16p to 598p as it warned margins were likely to ease slightly in the year ahead.
But sugar producer Tate & Lyle was lifted by a 9.2% rise in half-year profits to £130 million, sending shares 5.75p higher to 447.25p.
Troubled home furnishings firm Courts saw its share price slump 31% – 21p lower to 46.5p – after it warned annual losses would be much worse than expected.
It was in stark contrast with rival MFI, which rose 5.5p to 108p amid speculation a takeover bid could be on the cards from retailers such as Argos owner GUS.
The biggest Footsie risers were Smith & Nephew up 48.5p to 517p, BSkyB rising 11.5p to 520.5p, Compass up 5.25p to 240p and BAE Systems rising 4.75p to 242.75p.
The heaviest fallers were Shire Pharmaceuticals down 20.75p to 519.75p, Man Group off 42p to 1302p, Amvescap down 5.5p to 306p and Prudential off 7.25p to 408.5p.