Retailers and insurers helped the FTSE 100 Index break through the 5700 landmark barrier today for the first time since July 2001.
The rally was led by high street giant Next after it said annual profits would be better than expected on the back of improved sales over the festive season - boosting its shares by 10%.
This helped a number of retailers, although the Footsie’s gains were largely prompted by global sentiment. The index ended the session 33.1 points higher at 5714.6, mirroring markets across the world after the Federal Reserve hinted US interest rate rises may be at an end.
In London, takeover talk regarding insurer Prudential contributed to the New Year rally. Speculation that American firm Prudential Financial could be mulling a tie-up helped the stock close 12.5p higher at 572p and boosted other insurers, with Norwich Union owner Aviva up 18p at 726p and Legal & General advancing 2.75p to 126.5p.
But they were all beaten to the top of the risers board by fashion chain Next as it revealed it expected pre-tax profits for the year to January 28 to be between £435m (€632m) and £450m (€654m), compared with City hopes of £420m (€610m) million. Next shares surged 157p to 1680p.
The comments cheered others in the sector, including Marks & Spencer, as Investec Securities forecast a strong finish to the year in line with the performance of Next. The broker upgraded its rating on both stocks, helping M&S rise 2.5p to 499.5p.
Hopes of solid Christmas trading also lifted Dixons group DSG International, which featured on the risers board with a lift of almost 3% or 4.5p to 170.75p.
But other retailers did not fare so well amid fears that Christmas had only been kind to a few. Argos owner GUS slipped 8p to 1008p while Kingfisher was down 0.25p to 234.25p.
Mining stocks were ahead as copper prices rose to record levels after miners went on strike in Chile. This left Xstrata the third highest Footsie climber - lifting 53p to 1473p – while BHP Billiton rose 8.5p to 972p and Rio Tinto added 16p to 2719p.
They were joined on the way up by BAE Systems after broker Credit Suisse First Boston lifted its price target on the stock and reiterated its “outperform” rating. Shares in BAE were 9.25p higher at 395.75p.
In contrast, Halifax and Bank of Scotland owner HBOS was one of the heaviest fallers after Goldman Sachs downgraded the stock. Shares slipped 16.5p to 957.5p.
Outside the top flight, shares in Amstrad surged 16% – up 24.5p to 178p - after the electronics group headed by Sir Alan Sugar told investors its annual results were set to beat hopes.
The highest Footsie risers were Next rising 157p to 1680p, Cable & Wireless up 5.5p to 126.75p, Xstrata rising 53p to 1473p and Alliance UniChem up 27p to 825p.
The heaviest fallers were BOC Group down 23p to 1168p, HBOS off 16.5p to 975.5p, BAT down 21p to 1290p and Unilever off 8.5p to 574p.