MARKET REPORT Sparkling New York adds to the excitement

The FT-SE 100 jumped 38.8 to 3,050.6 and the FT-SE 250 index 16.9 to 3,332.5. Turnover was 736.8 million with 28,534 bargains.

Another scintillating New York display provided additional inspiration for an already excited stock market.

In often keen trading the FT-SE 100 index surged 38.8 points to 3,050.6, its best performance this year. In the past three trading days it has jumped more than 60 points.

But the huge gap between New York's Dow Jones Average and the FT-SE blue chips index continues to intrigue. Many feel the yawning difference of nearly 1,000 points underlines the oversold position in London. Others believe the Dow Jones' narrow portfolio makes comparisons invidious.

Even so the seemingly growing gulf between the two markets is a development many have yet to assimilate. There has for long been talk of a decoupling of London from New York. Clearly expectation has now given way to reality.

Although US shares continue to have a considerable impact on London their influence is on the wane; a trend that has become increasingly apparent as the two share markets have diverged.

But there is no doubt that, at least for the time being, links remain and London still appreciates a little transatlantic encouragement. When shares are on form they will latch on to New York for any extra incentive.

However, while the Dow Jones is hitting new highs, Footsie has yet to top its best level this year and is a far cry from the 3,520.3 peak achieved in February last year.

An easing of higher interest rate fears and calmer conditions in the currency markets were the reasons put forward on both sides of the Atlantic for the latest exuberance. A downbeat distributive trades survey from the Confederation of British Industry, pointing to a slowdown in retail sales, set London on its way. Then New York drew comfort from a US retail slowdown which in turn helped the hard-pressed US dollar.

Glaxo was one blue chip in form, hitting 697p, its best level for more than a year. The benefits of the £9bn Wellcome acquisition are having an increasingly strong impact on sentiment, as the market takes the view that the few remaining regulatory hurdles will not prove insurmountable. In sympathy Wellcome rose 6p to 1,052p.

Fisons, the drugs group, remained wanted on a combination of recovery and takeover hopes. In busy trading the shares edged ahead 1p to 150p.

Vodafone, the mobile telephone group, improved 4p to 195p in what, on the surface, appeared to be heavy US buying. But some suggested that the share, for long a US favourite, had enjoyed the benefits of some hamfisted registration of deals. One deal, it was alleged, had been punched into the system four times, double the more normal arrangement.

British Airways had little difficulty shrugging off the surprise decision by the legendary US investor Warren Buffett to write down his investment in USAir, the troubled American airline.

There has been pressure on BA to lower the value of its £261m, 24.6 per cent stake in USAir for some time. But BA has insisted on sticking with its original valuation. The shares rose 2.5p to 384.5p.

Presentations made an impact. BTR put on 9.5p to 329p following a meeting organised by Barclays de Zoete Wedd; Granada, meeting analysts later this month, rose 8p to 513p. But the engineer Siebe, showing analysts its US operations, shed 2p to 523p.

Three companies heading for the Scottish circuit were firm. Polypipe, up 2p at 129p, is expected to produce profits of £25m this year and £31m next. CIA, the media buyer, made profits of £5.3m and is likely to reach £6.1m this year. Wellington, a chemical group, is set to follow maiden profits of £4.1m with more than £5m. CIA gained 3p to 140p and Wellington 2p to 190p.

Northern Electric recovered from Monday's fuse with a 51p recovery to 789p. There is speculation that Trafalgar, firm at 58p, will produce a 1,000p a share offer, a compromise shot which will win the Northern board's support. BT gained 4.5p to 370.5p on hopes of an Israeli telecommunications deal.

Banks were firm, with a stock shortage helping TSB 8p higher to 234p

Costain, the troubled builder, had another busy session, although the shares held at 11p. Turnover approached 12 million. Monday's activity stemmed, it appeared, from Robert Fleming Securities, disappointed by the progress of the disposal programme, cutting its stake by 4.43 per cent to 13.88 per cent. But Mohamed Abdulmahsin Kharafi & Sons has used the sale to increase its stake to 7.48 per cent.

Asda, the supermarket group, continued its recent firm run, climbing 1.25p to 71.25p. There has been talk that Allied Carpets, where Asda has a 40 per cent interest, planned a share flotation. But such as move is unlikely in the short term.

Smith New Court shaded 1p to 477p. The recruitment by Schroders of Philip Augar from NatWest Securities is seen as another attempt by the investment group to build up a stockbroking operation, therefore reducing the chance of a bid for Smith.

SEET, the textile group, fell 5p to 58p. Ashleybank, a company run by the Stevenson textile family, has acquired the 25.34 per cent stake thought to be associated with the chairman, Jock Mackenzie. It paid 72p a share.

Domestic & General, the insurance group, remained weak, falling 107p to 1,363p. The shares have fallen 272p since Monday's results.

Ibstock Johnsen, the brick maker, slipped 1p to 81p as Brierley Investments emerged as a 7.29 per cent shareholder; Arcon International, the resource group, tumbled 15p to 26p following confirmation that a rights issue was under consideration.

Quality Software Products, the computer group, was unchanged at 366p. Profits are due next week and around £2.5m is expected.

Danka Business Systems is raising up to $200m, prompting speculation its long-suspected UK strike is near. MR Data Management, up 1p at 109p, is one candidate, but some suspect the US office equipment group could be thinking of barging into Berkeley Business Group's agreed bid for Southern Business Group. Berkeley shares have been under pressure since its bid.

Dealings are due to start tomorrow in the shares of Datrontech, a computer group. Some expect a heady premium over the 130p the shares were placed at by stockbroker Panmure Gordon. It seems the placing was heavily oversubscribed. Some analysts believe the shares could go as high as 150p. If the shares do run away it will be in sharp contrast to recent new-issue performances.