'Turbocharged performance' propels FTSE to two-year high

The FTSE 100 Index closed the week at a fresh two-year high today after a spectacular rally boosted top-flight shares.

Significant gains by all the major sectors lay behind a surge that saw the Footsie end the session 88.8 points higher at 4659.6 – its highest level since July 2002.

The growing belief that interest rates will not rise again this year helped fuel the upbeat mood, while the start of the fourth quarter also encouraged investors to commit new money.

Jeremy Batstone at broker Charles Stanley described the Footsie’s progress as a “pretty turbocharged performance”.

“There was a spring in the step of the stockbrokers during the afternoon,” he said.

Financial stocks were driving the Footsie higher after Northern Rock offered upbeat news on the mortgage market. The bank put on more than 3% after reporting little impact from a slowdown in the housing market, leaving all of its rivals in positive territory.

Martin Dobson, senior broker at Hoodless Brennan, said the start of the fourth quarter had encouraged investors to commit new money to the market.

He added: “People are feeling a bit more bullish about the new quarter and have decided to put some new money in.

“I’d expect to end the year at around 4800, although the Footsie could go higher if the oil price lessens and third quarter results in the United States come in a little stronger than expected.”

Only two blue-chip stocks – William Hill and Sainsbury’s – ended the session in negative territory.