On a day that would make the heads of even the most sturdy spin, the FTSE 100 went on a rollercoaster ride as it opened up, plummeted down and climbed back up again to reach an even higher level than it had achieved in morning trading.
The index of leading shares closed up 69.4 points at 6230.1. The shock decision to raise interest rates by a quarter point to 5.25% at midday caused a brief scare, and it fell 60 points, before beginning to recover an hour and a half later.
The miners outweighed the impact of the rate decision, with BHP Billiton topping the list of FTSE 100 risers. Shares in the world's largest miner rose 43.5p to 930p. Xstrata was up 91p to £23.99, Rio Tinto rose 100p to £26.49, and Kazakhmys edged up 40p to £10.53.
Rolls-Royce also did well following a deal with Singapore Airlines to maintain the Trent 800 engines on the airline's 58 Boeing 777s. Merrill Lynch raised its price target for the group from 530p to 565p, saying it was "in the right market". Analysts said the group could gain from the growth in wide-body deliveries, such as the Boeing 787 and the Airbus A380, in the next decade. Rolls-Royce has a share of about 32% in that market. Its shares rose 13.75p to 468.75p.
AstraZeneca increased 42p to £28.36 after it announced a global collaboration with the US pharmaceuticals group Bristol-Myers Squibb to develop and commercialise the latter's two diabetes drugs. One of these, Saxagliptin, is in Phase 3 clinical trials and - if successful - should file for regulatory approval in the first half of 2008. The other, Dapagliflozin, is in Phase 2b development.
AstraZeneca's late-stage pipeline has been looking increasingly empty after a series of Phase 3 drugs were unsuccessful. This should replenish the pipeline to a certain extent. The deal's financials were also considered favourable to both parties.
Despite the relatively small impact of the interest rate decision, some stocks, including property and building companies, still took a hit. Land Securities was high on the list of FTSE 100 fallers, down 38p to £21.65. Persimmon dropped 15p to £14.57, Liberty International was down 11p to £13.35, and British Land was off 7p at £15.73.
On the FTSE 250, others followed. St Modwen shed 20.5p to 551p, Redrow was down 22p to 668.5p, followed by Bovis Homes, which slid 28p to £10.56.
Some of the banking stocks also saw an impact from the rate rise. Northern Rock shed 16p to £11.58, and HBOS fell 11p to £11.45.
In addition, a series of disappointing trading statements weighed on the FTSE 100. Alliance Boots headed the list of FTSE 100 fallers following its update. The group, created from the £8bn merger of Boots and Alliance Unichem last summer, posted a 1.5% rise in underlying UK retail sales in the last three months of 2006 - a figure that disappointed analysts as sales had been 4.5% ahead for the half year. Shares in the company fell 22.5p to 811p.
J Sainsbury fell 4.25p to 410.25p despite a 5% rise in third-quarter underlying sales, excluding fuel, and a record Christmas. But investors were unexcited about the figures, which matched City expectations but no more than that.
In the FTSE 250, Spectris topped the list of risers as it said sales for the year increased by about 6%, and operating margins improved. Profit before tax is expected to be ahead of most analysts' estimates. Shares in the company, which makes electronic controls, soared 62p to 808.5p.
Taylor Nelson Sofres, a market research firm, came a close second when it said it had made good progress in restructuring its troubled US custom division since it issued a profit warning in July. Its shares rose 15.5p to 221p. But some analysts said the details were too sketchy. Panmure Gordon said adjusted operating profit was expected to be in line with expectations, but added there was "little solid detail on what is happening at US custom".
Meanwhile, two companies saw their stock slide on the back of sizeable share placings. Savills, the upmarket property company, fell 5p to 642p as 25.9m shares were sold on behalf of CB Richard Ellis Group, representing just over 19% of the company, for about £161m. The group said it had bought a portion of those, or 2.6% of the share capital, for £21.8m.
PartyGaming, meanwhile, topped the list of FTSE 250 losers as it edged down 1.5p to 32.25p following the placing of 160m shares, worth almost £50m, and representing a stake of 4.1% in the group. The shares are understood to have been sold by a founder of the online gaming company.
And finally, in the smaller cap arena, Ark Therapeutics, the biotechnology company, rose 13.25p to 132p as it announced it had had a positive meeting with the US food and drug administration regarding its Trinam gene therapy that prevents the blood vessels blocking in kidney dialysis patients who have had vascular surgery.
The therapy is at the end of Phase 2 trials, and the FDA has given the green light for it to progress to Phase 3, the last stage of drug development. In addition, the US watchdog has signalled that the company will only need to undergo one Phase 3 trial.
Reed bid talk
Reed Elsevier, the publishing group that owns LexisNexis, saw its shares jump 20.5p to 602.5p amid renewed talk of a possible bid. Last Friday, the Anglo-Dutch group rose 2% as investors said it could be a target for Wolters Kluwer, a Dutch publisher. There was also talk that it may be planning an asset swap with its rival. In addition to that, a private equity bid has been touted. Some observers believe there could be regulatory issues surrounding a merger with Wolters Kluwer, pointing out that European Union regulators already scuppered a previous attempt in 1998. But analysts at Credit Suisse have reiterated their view that the company could well become the target of a buyout because it has low debt, an attractive valuation and strong cash flow.