Global view dominant as FTSE surges

Published on Tuesday 31 August 2010 22:45

LONDON FTSE 100 CLOSE 5,366.41 +141.19

Global stock markets soared higher yesterday as investors took heart from positive signs for the global economy, with the Footsie posting its biggest daily gain in almost two months

The FTSE 100 -index surged by 2.7 per cent - up 141.19 points to 5,366.41 - in a welcome bounce back after volatile trading in recent days due to worries over the recovery.

America's Dow Jones Industrial Average was also striding ahead in early trading, with better-than-expected data on the US and Chinese manufacturing sectors adding to cheer over upbeat growth news from Australia.

Markets across Europe joined in the rebound, with the Cac 40 in France up 3.8 per cent and Germany's Dax closing 2.7 per cent higher. The positive economic data helped London stocks overcome worse than expected manufacturing figures from the UK - with a survey indicating the pace of growth slowed to a nine-month low in August.

The pound slipped almost a cent against the dollar at one stage before clawing back the ground later on, to stand 0.7 per cent higher at $1.55.

Ben Critchley, sales trader at IG Index, said: "The FTSE is in rude health, up above the 5,350 level in afternoon trading, marking a fourth consecutive day of gains stretching either side of the bank holiday weekend."

Bid gossip over Thomson Holidays owner TUI Travel and telecoms firm Cable & Wireless Worldwide also added to the investors cheer in London.

While there was little in the way of corporate news to excite investors, traders seized on the blue-chip bid rumours.

C&W Worldwide was the leading riser, gaining 8 per cent or 5.2p to 73p, on rumours of interest from US giant AT&T. Shares rose by as much as 11 per cent at the height of the gossip.

The telecoms firm was closely followed by TUI Travel, which added 15.1p or 8 per cent to close at 216.4p, on reports that Germany's TUI could buy the 42.5 per cent share of the business that it does not already own.

Beside the bid talk, the best Chinese manufacturing figures for four months boosted metal prices and helped the Footsie's heavily-weighted commodities stocks.

With copper prices buoyant, Kazakhmys added 80p to 1,236p, while Xstrata was 62.5p better off at 1,088.5p.

The gains left just one Footsie stock in negative territory. Randgold Resources was the only casualty, losing 70p to end the day at 6,010p, while power transition firm National Grid remained unchanged at 549p as traders bought into racier sectors. Oil giant BP was an early faller, but moved back into the black later as it announced the sale of some of its Malaysian assets to state-owned Petronas. Shares gained 8.2p to 388.8p.

In the FTSE 250, fund manager and financial advisory firm Hargreaves Lansdown added 0.9p to 390p as investors welcomed an 18 per cent rise in full-year profits and a healthy dividend hike.The firm has been helped by recovering stock markets and strong levels of new business.

Elsewhere, car dealership Vertu Motors added 2 per cent or 0.5p to 26.75p as the Newcastle-based firm raised half-year profit forecasts after buoyant sales of new and used cars in the five months of the year so far.