Footsie flirts with all-time high in brisk trading

Share prices soared with the mercury in London yesterday, driving the leading FT-SE 100 share index tantalisingly close to the 3,500-level last attained 18 months ago. The all-time high was 3,520.3 set in February 1994.

The index closed exactly 50 points higher at 3,499.9, although its briefly touched 3,505 in mid-afternoon dealings. Volume trading was very good for the holiday season, with more than 874 million shares changing hands in 27,494 bargains.

Dealers said there were several factors behind the surge. They included the Japanese government's surprise relaxation of restrictions on institutions investing overseas, which unilaterally boosted the dollar and sterling in the currency markets; the Bank of England softening the tone of its concerns on inflation; and an unexpected improvement in the UK trade figures.

Investors also paid scant regard to the Bank maintaining that interest rates would have to rise to keep inflation in check, and took more notice of speculation that German rates may soon fall.

Rises in share prices were recorded from the opening bell and were given an additional boost in afternoon dealings from a strong opening on Wall Street.

The gossip pot for take-over bids also remained at boiling point, pushing several stocks sharply higher.

And fuel for the fire was provided by David Lloyd Leisure, up 15p to an all-time high of 324p on confirmation its was in bid talks.

Rank Organisation, ahead 8p to 430p, and First Leisure, down 1p to 324p, remain the market's favourite suitors for Lloyd, an operator of tennis and fitness clubs.

First Leisure tried to buy the company before it floated on the stock market just two years ago.

There is talk of a pounds 164m, 350p-a-share bid for Lloyd, and a long list of other potential predators, mainly the big guns in the brewing and pubs sector.

They are Whitbread, 3p firmer at 633p, which has virtually no borrowings and is expanding its leisure operations, Bass, 3p higher at an all-time high of 674p, and Boddington, also 3p better at 278p.

The latest big name to be added to an already long list of speculative bid targets is Mercury Asset Management, which was recently released from its parental ties when SG Warburg was bought by Swiss Bank. MAM climbed 18p to 837p, valuing the company at more than pounds 1.5bn. The bid rumour started early in the day, and centred on a possible offer by Munic Re which acquired a 4.5 per cent by converting its Warburg shares into MAM stock as part and parcel of Swiss Bank's take-over of the merchant bank.

The electricity sector was awash with yet more rumours of imminent takeovers despite fears the Monopolies and Mergers Commission might be asked to investigate the industry.

London Electricity stood out, rising 29p to 774p at which price it is valued at pounds 1.53bn. Pacific Light & Gas of the US was widely tipped as the predator in waiting.

Eastern Group rose 9p to 918p but remains well adrift of the 975p cash offer on the table from Hanson, up 2.5p to 216.25p. South West, on the end of an aggressive 900p bid from Southern Electric of the US, added 4p to 903p. Manweb eased another 1p to 867p, and looks increasingly likely in the market's eyes to lose its fight for independence against Scottish Power, up 2p to 318p.

Similarly, Smith & Nephew, rumoured to be in the acquisitive sights of Johnson & Johnson, gained 2p to 193p.

Zeneca, which has also featured strongly in recent bid rumours, advanced 9p to pounds 11.20. Interim results are due today. Analysts at NatWest Securities expect pre-tax profits to rise from pounds 451m to pounds 505m.

In electrical equipment, BICC closed 3p ahead at 330p on revived speculation of a bid from Siemens.

Best recorded rise of the day was Eurodis Electron, which returned from suspension following the deal with Electron House and promptly climbed 33p to 214p.

Among the main fallers was Airtours, the UK's second-largest tour operator. Shares fell 3p to a fresh year's low of 381p amid concerns that holiday companies will have to slash prices to clear their books of unsold holidays.

Late bookers using Airtours can now get pounds 100 each off selected brochure holidays, take children for pounds 1 each, and enjoy a 10 per cent discount on holidays to the US and other faraway destinations. Those who have already had a trip abroad can already get a 12 per cent discount off a winter ski holiday, and also book their sojourn on the slopes for only a pounds 5 deposit.

United Biscuits finished 3p better at 304p on hopes of a quick sale of Keebler snacks.