London follows Wall Street recovery

The London market bounced back to the 4,200 level today after a strong start on Wall Street boosted sentiment.

The US’ key index, the Dow Jones Industrial Average, surged nearly 250 points in the first few minutes of trading this afternoon, as investors expressed relief over corporate earnings.

Traders were cheered with figures from financial services group Citigroup and chipmaker Intel. Although Intel’s figures came in at the low end of expectations traders were pleased with forecasts of higher revenue.

Wall Street’s gains helped sentiment in London, and by mid-afternoon, the FTSE 100 Index had surged 178 points at 4200.

Tom Hougaard, trader at City Index said: ‘‘On the back of Intel’s earnings numbers last night we had expected the US to open down, but as the earnings numbers from several companies came through it became clear that a rally was in the making.

‘‘UK and European markets found tremendous support from Wall Street’s strength.’’

However traders do not expect the fragile US market which has dropped sharply over the past eight weeks to be able to hold its gains for very long.

‘‘We’ve seen it all before - up 300 one day and down 200 the next, so it is anyone’s guess where we will be tomorrow. For the time being though it looks as though the bulls are back in town,’’ said Mr Hougaard.

In London, among stocks posting sharp rises were banks, telecoms and oil firms.