FTSE 100 records for three years

 

London's leading shares index saw its best weekly performance in
nearly three years today as investors were spurred on by new moves from
political leaders to resolve the eurozone debt crisis.

Britain's top 100 listed companies added £100 billion to their value this week as the market surged 7.4% - the biggest gain since the second week of January 2009.

The FTSE 100 index was 1.1% higher on the day, closing at 5552.29, after German Chancellor Angela Merkel called for far-reaching regulatory change in the European Union to ensure a more stable economic future.

Mrs Merkel said the EU treaty must be changed to bring about closer fiscal union in the 17-nation eurozone to enforce stricter financial control.

Elsewhere, Prime Minister David Cameron called for "a big bazooka approach" to the crisis following a meeting with French President Nicolas Sarkozy ahead of a crucial summit in Brussels on December 9.

Meanwhile, Citigroup Global Markets underlined confidence as it maintained its forecast for the 2012 year-end price for the FTSE 100 at 6200, despite heightened market volatility in recent weeks.

The market, lifted by the perceived progress in the eurozone, was given an extra boost on Wednesday when six central banks, including the Bank of England, announced emergency moves to free up the credit flow to businesses and households.

There was further cheer on the other side of the Atlantic as the US jobless rate fell to 8.6%, its lowest level since March 2009 and lower than City expectations of no change at 9%.

But David Jones, chief market strategist at IG Index, warned there were still nagging doubts over the markets' enthusiasm.

He said: "We have been here before - where the market takes its lead from political speeches but ultimately ends up being disappointed when policy doesn't follow as quickly."

The improved sentiment in Europe, combined with the central bank action to improve dollar liquidity, has also helped ease implied borrowing costs for European countries which have come under pressure in recent weeks.

Italy saw the yield on 10-year bonds fall back below the critical 7% level to around 6.5%, while Spain saw the equivalent yield fall back to 5.5%, in a sign that investors' confidence in the country's finances is being restored.

The banking sector was one of the main beneficiaries of the change in mood, with Barclays hitting the top of the FTSE risers' board with an 8% gain, Lloyds Banking Group advancing 6% and Royal Bank of Scotland adding 5%.

However, traders warned that, if the rally was to continue, political leaders would have to deliver a credible plan to resolve the eurozone's problems at the summit next Friday.

David White, trader at Spreadex, said: "Given recent history, and in spite of a concerted effort to help make the solutions to Europe's debt crisis global, bulls would be forgiven for worrying."

The pound fell to 1.16 against the euro as the single currency was boosted by the improved sentiment, while metal and oil prices also rose.

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea