London, German and French markets reach two-year high as sentiment rises

Investors piled into equities sending markets to two-year highs yesterday as most of the major macro-economic risks that threatened to derail the recovery now appear to be receding.

The London, German and French markets reached two-year highs yesterday, with most European markets also having a good day, as investor sentiment improved on the temporary resolution to the US debt ceiling negotiations.

Just as US fiscal cliff negotiations had weighed on markets towards the end of last year, looming fiscal cliff negotiations had the potential for political gridlock and ensuing economic uncertainty. But the White House and US Congress have agreed a three-month extension to these talks. The markets are taking the view a resolution will be found before then to raise the US government’s $16.4tn debt ceiling.