The London market continued its nervous rally today after sentiment was boosted by better-than-expected economic data from the US.
World markets have swung wildly in recent weeks on fears that the US would lead the world back into recession but improved manufacturing figures from the world’s biggest economy helped soothe traders’ jitters.
The FTSE 100 Index rose 76.4 points to 5205.9, while the Dow Jones Industrial Average made slight gains after surging ahead 3% yesterday.
Markets have pushed higher this week, helping them regain some of last week’s losses, on hopes that Federal Reserve chairman Ben Bernanke will indicate more quantitative easing was on the cards in a key speech on Friday.
Asian markets fell overnight after confidence was hit when Moody’s downgraded Japan’s credit rating, citing weak growth prospects for the world’s third biggest economy and massive Government debt.
The London market struggled to make gains in earlier trading until the US Commerce Department reported an unexpected 4% surge in demand for long-lasting manufactured goods, such as cars and planes, in July.
The pound was down against the euro and the dollar at 1.14 and 1.64 respectively.
Gold continued to fall from its recent record highs of 1912 US dollars, to 1785 dollars.
Banks, whose shares have been pummelled in recent weeks as a result of the eurozone debt crisis, staged a recovery. Taxpayer backed Royal Bank of Scotland was up 9%, or 1.9p to 21.9p, while Lloyds was ahead 1.8p at 30.1p.
Among corporate results, car insurer Admiral was the biggest faller in the top flight, down 12%, after it posted half-year profits of £160.6m, a rise of 27%.
While the figures were in-line with expectations, Admiral’s warning that injury claims and their related costs continued to rise in the UK prompted a sell-off for shares.
The stock dropped 182p to 1353p, which took some of the shine off the award of a £1,500 shares bonus for 5,700 Admiral staff.
Other fallers included outsourcing firm Serco after a 10% rise in half-year profits to £111.8m was offset by its warning over continued headwinds in its UK and United States markets. Shares were off 21p at 511p.
Advertising giant WPP was among the top risers after it said its sales and profits have returned to levels seen before the 2008 crash of Lehman Brothers.
Its boss Sir Martin Sorrell said the group did better than expected in the first six months of 2011 as revenues ploughed ahead by 6.1% to £4.7 bn.
Shares were up 7%, or 43p at 623p, despite Sir Martin warning of storm clouds ahead and saying “we still have to see how the latest stock market crisis affects consumer and client thinking and actions.”
The biggest Footsie risers were Man Group up 20p at 216.1p, Royal Bank of Scotland ahead 1.9p at 21.9p, Tullow Oil ahead 79.5p at 1026p, and WPP up 43p at 623p.
The biggest Footsie fallers were Admiral down 182p at 1353p, Serco off 21p at 511p, Randgold Resources down 230p at 6410p, Essar Energy off 3.9p at 251.6p.