OVERSEAS : British Stocks, Currency Up on Thatcher Announcement

British stocks and the pound managed slight gains in hectic trading Thursday, but share prices failed to sustain a rally that greeted Prime Minister Margaret Thatcher’s announcement of her resignation.

The Financial Times-Stock Exchange index of 100 leading shares surged more than 34 points within 20 minutes of the news that Thatcher had decided to step down after 11 years in office.

But the key index later retreated, closing up just 1.6 points at 2,127.9 because of fresh uncertainty over who might succeed Thatcher as leader of the ruling Conservative Party.

The pound rose against major currencies in Europe, after initially falling on Thatcher’s announcement. Against the dollar, the British currency rose to $1.9715 from $1.9695 in London late Wednesday.

At first, Thatcher’s decision was seen as ending a party rift that deepened when she barely repelled a party leadership challenge from former cabinet minister Michael Heseltine in a first ballot held on Tuesday.

News of her resignation sent shares sharply higher, with markets hoping a new leader would emerge to reunite the party and keep the Conservatives in power.

But uncertainty resurfaced when two Thatcher cabinet ministers, Foreign Minister Douglas Hurd and John Major, the finance minister, said they would run in a second leadership ballot next Tuesday. Heseltine will be the third candidate.

“This is bad news. The uncertainty which was removed by Thatcher’s resignation has returned. The Conservatives are back to squabbling about the leadership,” said one trader at London’s International Stock Exchange.

The political turmoil overshadowed most European financial markets, many of which were subdued by the Thanksgiving holiday in the United States, where markets were closed.

The dollar edged higher against the mark in London, closing at 1.4800 marks. It was steady against the yen at 127.20.

Crude oil prices rose slightly on London’s International Petroleum Exchange after President Bush told troops in Saudi Arabia that Washington would not appease Iraq.

North Sea Brent Blend crude oil for January delivery rose to $29.89 a barrel late Thursday in London after closing at $29.63 in New York Wednesday.

Gold also rose, adding $2 to $380.25 an ounce in London.

German stocks advanced, with the 30-share DAX gaining 28.80 points to 1,496.10. Dealers cited investor demand for blue chips ahead of the launch of a new DAX futures contract.

In Tokyo, the 225-share Nikkei average closed 583.29 points higher, or 2.56%, at 23,400.28.