An afternoon rally in London powered the FTSE 100 Index forward today to close above the 5900 mark for the first time since June 2001.
Airports operator BAA breathed life into the market as rumours swirled around the City that a bid could be in the offing.
And early gains of more than 100 points on Wall Street added to the goodwill on this side of the Atlantic to send the Footsie up 52 points to 5907.9.
It was a fitting end to a turbulent week which saw the Footsie test 5900 on Monday before losing 85 points in a serious bout of profit-taking.
Shares in BAA, which operates airports including Heathrow, rose 5% today or 39p to 814p after a torrid session yesterday saw them slump 7%.
The fall came as speculation mounted that Ferrovial was no longer keen on an offer, but hopes were rekindled after reports in today’s press quoted sources close to Spanish suitor as saying its takeover ambitions remained very strong.
Another long-running takeover saga also generated fresh buying interest. Lloyds TSB shares rose 1% or 4.5p to 535.5p on a report that UBS had been appointed adviser to a major European bank looking to launch an acquisition, putting Lloyds in the frame.
But bid hopes elsewhere in the top flight ebbed away as BT gave up ground secured in the wake of reports of £20 billion private equity interest.
Investors lost patience with a possible offer for BT as analysts said the pensions issue might frighten private equity firms, stopping them from bidding. BT eased 3p to 224.5p.
BAA was beaten to the top of the Footsie risers board by Kazakhmys as miners staged a recovery in late trading. The sector proved to be a drag on the market early on but by the close of trading Kazakhmys was up 48.5p to 910p while Xstrata gained 40p to 1703p and Antofagasta ticked 46p higher to 2020p.
The banking sector also turned round early losses, with Alliance & Leicester up 9p to 1069.5p and Barclays 13.5p stronger at 660.5p.
Halifax owner HBOS is one of the shareholders of Rightmove, and the better-than-expected listing of 18% of the property website’s shares boosted the high street bank’s shares 2.5p to 999.5p.
Rightmove made its debut on the market at 335p but shares were later trading at 392.25p, giving the business a value approaching £500m (€730m) – far higher than expectations at the start of the year for a value of around £200m (€290m).
But investors lost their appetite for Greggs shares after the high street baker warned it faced a difficult year.
Shares slumped 12% – off 545p at 4058p – following cautious comments from the group about rising energy costs and the impact of increased competition.
The day’s biggest blue chip risers were Kazakhmys up 48.5p to 910p, BAA 39p stronger at 814p, Smiths up 32p to 987p and Brambles Industries with gains of 13.25p to 436.25p.
The heaviest fallers were Kingfisher down 3.75p to 231p, BT off 3p to 224.5p, AB Foods 6p weaker to 869.5p and Rentokil Initial off 0.75p to 155.25p.