Looking up: City starts new decade with cautious optimism

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The City starts 2010 from a position of relative strength, following a 22 per cent rally in the Ftse 100 index over the past 12 months.

Recovering from its annus horribilis in 2008, the index increased by nearly 1000 points to close on New Year's Eve at 5412.88 – a particularly impressive upturn as the index fell below its worst 2008 level for most of March.

However, signs of life in mergers and acquisitions, major stock market listings and some improved financial results lifted investor spirits in the second half of the year. Market watchers hope to see the index crack 6000 this year for the first time since June 2008. Last year the London Stock Exchange was characterised by rights issues, which saw more than £50bn of new equity on the main market. Lloyds Banking Group alone raised £13.5bn.

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