Shares soar as optimism returns

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The Independent Online
THE STOCK market rebounded sharply yesterday, to leave the FT- SE index of 100 leading London shares within shouting distance of 3,000. But the mood remained nervous ahead of today's US employment figures.

Dun & Bradstreet, the business information group, said its latest survey of business optimism showed little sign that trade was being hit by last month's tax increases. Optimism over sales rose to a five-year high, but businesses were also more optimistic about being able to raise their prices than at any time since early 1991.

The Footsie gained 48.9 points during the day to close at 2,980.8, more than reversing the 39-point fall seen on Wednesday. The index was helped higher by a strong performance on the futures market and by signs that large institutional investors were beginning to hunt for bargains.

The gilts market also had a better day, outperforming US and German government bonds. Traders who had sold stock they did not own in the expectation that prices would fall further were forced to buy them back.

Dealers said the US employment figures would be crucial to the mood in which the market ended the week. Wall Street economists expect the Labor Department to report a 285,000 rise in non-farm employment in May, following a 267,000 increase in the previous month. An unexpectedly low figure would be good for bonds because it would ease the pressure on the Federal Reserve to raise US interest rates.

The US Commerce Department said that factory orders fell by 0.1 per cent in April after a sharp rise in March. Excluding orders for defence equipment, orders showed their first fall for six months.

The UK market took little notice of the latest official reserves figures from the Treasury. These showed Britain's reserves of gold and foreign currency rising by an underlying dollars 25m last month.

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