Turnover may have been paltry, but the FTSE 100 managed hefty gains this morning, lifted by holiday cheer. At 1407 the Footsie was up 72 at 5939 points - off the day's high of 5,970. Share turnover stood at 160m by 1400 GMT .

"Quite frankly everyone expected the market to be better today, given the fact that the other markets were up too," said one dealer.

Key New York indices managed moderate gains on Monday as did Tokyo's and Hong Kong's benchmarks overnight. "But it's mainly window dressing ahead of the year end. The funds doing their valuations at the end of the year want to see the market finish as near to 6000 as possible. All the movement is in the FTSE 100 rather than the other indexes," he added.

"It doesn't take much to move it upwards in these sort of volumes. I think people are quite positive and prepared to put money where they see opportunities. It's all very cosmetic though. We will probably see much the same story tomorrow," he said.

Trade this week is restricted to a full session today and a half session on Wednesday, which many market participants have taken off. There is no official economic data and corporate news is very thin on the ground.

GEC shares were up 29 pence at 570p on press reports that the engineering and defence group will merge with one of four possible partners - including British Aerospace - early in the New Year. British Aerospace shares dipped 4p to 513p.