Investors are pinning their hopes on another good year for the FTSE 100 Index in 2007, buoyed by fresh takeover activity and higher commodity prices.
The Footsie powered to a new five-and-a-half year high of 6260 before Christmas and most stockbrokers reckon it can make further progress.
It closed yesterday at 6240.9. Hargreaves Lansdown is the most upbeat with a target of 7000, while Barclays Wealth tips 6800 and Brewin Dolphin and Morgan Stanley are offering a more conservative 6550.
Clem Chambers, chief executive at shares and stocks website ADVFN, said: "The FTSE 100 is now within striking distance of making new all-time highs - 6930.2 in December 1999.
"This won't happen immediately, but only an obsessive bear would bet against breaking through to new heights in 2007."
The market's biggest boost in the last 12 months has come from merger and acquisition activity.
Foreign buyers snapped up companies such as airports operator BAA and AB Ports, leaving shareholders to crack open the bubbly and celebrate big wins.
Only 11 of the FTSE 100 stocks are down on their opening price on New Year's Day, with mining and power firms cashing in on heavy metal, oil and gas prices.
A key issue is whether takeover activity can continue at its recent pace into 2007 and offer a boost to FTSE 250 companies and prize pickings at the lower end of the FTSE 100.
Graham Secker, an analyst at Morgan Stanley, said: "We remain bullish on equities - as confidence in global growth out-look improves next year, we expect to see commodity prices to rise."
That could mean another bumper year for mining stocks, while signalling a recovery for oil giants such as BP and Royal Dutch Shell which have lost out in recent months.
Analysts are making positive noises about BP's recovery prospects in 2007, while drugmaker GlaxoSmithKline's strong pipeline is enough for it to be tipped for growth and Royal Bank of Scotland could benefit from its stake in Bank of China as the economy in the Far East grows.
However, not everyone is confident of unhindered FTSE progress, amid worries about where support will come from if corporate activity dries up, while further weaknesses in the US dollar could also hurt UK exporters.
Trevor Greetham, asset allocation director at Fidelity International, said: "Lead indicators for growth are weak, but most central banks are still raising rates. The world economy is likely to slow in 2007 with inflation moving sideways or downwards.
"I believe the backdrop of slower global growth and falling inflation favours global bonds over stocks and commodities. It also favours the more defensive developed markets over Asian and emerging-market equities."
The market could also be held back by concerns over the growing debt mountain in the West - especially in the UK and US - which has yet to act as a drag on the economy.
Meanwhile, geo-political flashpoints could come to a head, such as Iran's stand-off with the UN over its nuclear programme - a conflict which also could scupper market progression.
Mike Lenhoff, chief strategist at Brewin Dolphin Securities, said: "It is hard to imagine that equity markets won't face some heavy weather in 2007.
"They are invariably subject to big mood swings. Volatility can be hedged, but - as always with investment - you pays your money you takes your choice."
The Footsie started 2006 at 5618 and currently sits near 6200, not bad considering the scale of a hair-raising blip which rocked the market in May.
Top of the pile was mining group Lonmin, which gained almost 89 per cent, closely followed by rival Xstrata, blossoming nearly 86 per cent during the year.
Former British Steel firm Corus received a shot in the arm from high metal prices, but - more importantly - takeover speculation.
The £4.9 billion tug-of-war between Brazil's CSN and India's Tata Steel delighted investors, while wider M&A rumour was a theme encouraging others to put cash on the table throughout the year.
Foreign buyers snapped up companies such as airports operator BAA and AB Ports, leaving shareholders to crack open the Champagne and celebrate big wins.
However, it was not an entirely upbeat year as pharmaceutical firms found out with GlaxoSmithKline shedding almost ten per cent of its value, while AstraZeneca lost two per cent. Both felt the effect of tighter regulatory pressures, which started to affect drug pipelines.
Meanwhile, ITV's rollercoaster year ended on a low as investors cringed at lowly advertising figures and poor audience figures.
The takeover interest of NTL and RTE offered a shot in the arm, but it still crawled into December almost five per cent lower than at the start of the year. It remains to be seen whether new chairman Michael Grade can turn around the flagging broadcaster.
Probably the less said about gaming stocks the better, with Party Poker-owner PartyGaming leaving the FTSE 100 Index after investors bailed out following US laws banning online gambling there.
But the year's biggest loser was cruise company Carnival, which lost more than 24 per cent in the wake of ballooning oil prices and worries over travel in volatile parts of the world.
There was also the odd heart stopping moment for market players.
Billions were wiped off the value of blue chip stocks in May as the market dropped 300 points following a lengthy bull-run stretching back to the start of the Iraq war in 2003.
Exchanges around the world were hit by an aggressive sell-off as inflationary concerns in the US sparked fears a hike in interest rates could hit company profits.
At the height of the bloodbath, the FTSE 100 Index surrendered all the year's gains to stand below its New Year level - and at its lowest point was at 5532.7.
The retreat wiped almost £100 billion off the value of London's blue chip stocks and left investors desperate to find somewhere else to put their cash. Hefty commodity prices failed to help the situation.
Paul Mumford, senior fund manager at Cavendish Asset Management, said: "The market was looking a little bit frothy and I think people were expecting a correction at some stage. There was a sell-off because one or two investors become more than a little worried."
Mr Mumford believes the slump in the market has left its stamp, with some investors still unwilling to take a punt on risky stocks.
The AIM, which boasts a raft of oil and gas firms, is still feeling the pinch as speculators plump for safer stocks.
Even FTSE 100 oil companies experienced an exodus into more defensive stocks - BP lost almost eight per cent with Royal Dutch Shell also knocked by more than one per cent. But, despite the odd pothole, analysts think it has been a fairly buoyant time to be playing the markets.
Some predictions of where the FTSE will finish up in December 2007: Barclays Wealth - 6800 Brewin Dolphin - 6550 Hargreaves Lansdown - 7000 Investec - 6750 Morgan Stanley - 6550 Charles Stanley - 6700
