FTSE 100 index soars in rally

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The Independent Online

The FTSE 100 Index is on track to record one of the best December performances in its history thanks to a pre-Christmas Santa rally boost.







The blue chip index soared by 8.7% to 6008.9 in the first 24 days of December - beating its best ever December rise of 8.4% in 1987.



London's Footsie slipped into the red today, marginally reducing gains seen so far this month.



But recent blue chip advances have helped the top tier reach levels not seen since before the financial crisis struck in the summer of 2008.



The Footsie has so far added around 11% since the start of the year as the global economic recovery has helped stabilise market conditions.



The stellar December performance also came despite numerous setbacks including the eurozone debt crisis and heavy snowfall, which caused travel chaos and disrupted Christmas shopping.



December's rise is all the more remarkable because it followed a 15% rise in the market between the start of July and the end of November, said stock market historian David Schwartz.



"In 1987, the December rally occurred after shares did very poorly in October and November, so it was a bounce-back rally," he said. "But this year is a continuation of a strong rally earlier in the year."



So-called Santa rallies have caused the FTSE 100 to rise in December in all but five of the 27 years since the index was formed.



Mr Schwartz said it was not clear why the festive season had become such a strong time traditionally for stock markets, although thin trading volumes are thought to create unusual volatility.



This year's December performance was particularly strong because investors' confidence in the stock market is steadily growing, added Mr Schwartz.



He puts the strong growth of the FTSE 100 down to quantitative easing in the US, which is driving stock markets around the world.

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