Markets: Investors make hay while sun shines

Bargain-hunters yesterday helped the market bounce back from Tuesday’s rout as fears over the eurozone’s immediate solvency eased.

Will Hedden, sales trader at IG Index, said: “At first sight, it seems that Tuesday’s problems have disappeared as swiftly as they reared up.”

But he warned of lingering nerves over Spanish and Italian debt levels and said the FTSE 100’s 39-point rally to 5,634.74 felt like a “short-term bounce on the current journey lower” for markets. Banks led the rally after Barclays, which was one of the worst affected by the previous day’s sell off, was upgraded to “buy” on valuation grounds by broker Investec.

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Barclays added 3 per cent or 5.8p at 212.1p. Taxpayer-backed Lloyds and Royal Bank of Scotland were up 0.8p at 30.6p and 0.5p at 25.3p respectively.

Heavily-weighted mining stocks also offered support with Fresnillo up 52p at 1,568p and Antofagasta ahead 38p at 1,110p.

Security group G4S was another big riser, adding 3 per cent or 7p to 280.1p, after Morgan Stanley upgraded its rating from “equalweight” to “overweight”.

Outside the top flight, recruitment firm Michael Page International fell 3.5 per cent after its first-quarter performance revealed weak demand for banking posts, particularly in the UK and North America. The group, which saw shares drop 16.1p at 437.8p, reported a dip in UK profits, which make up 23 per cent of total group earnings.

Out-of-town homewares retailer Dunelm held firm after it said like-for-like sales grew 0.6 per cent in the 13 weeks to 31 March, a slowdown compared to 1.1 per cent in the 26 weeks to 31 December.

It said footfall was “depressed” in February and March but analysts were content with the update as shares lifted 7.5p to 521.5p.

Investors all but forgot the Tuesday’s burdens and sent US stocks soaring. It was a stark turnaround from the day before, when they’d pushed the market into a free-fall on worries about European debt and corporate earnings in the US.

The result was the Dow Jones industrial average climbed as much as 129 points in early trading before settling at 12,805.39, up 89.46 points. It lost 214 points on Tuesday.