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Shares rise on renewed optimism Shares rise on renewed optimism
(about 3 hours later)
European and Asian shares have risen strongly while Wall Street built on on Tuesday's gains, after the latest signs of US economic recovery. European and Asian shares have risen strongly while Wall Street built on Tuesday's gains, after the latest signs of US economic recovery.
The UK's FTSE 100 index was up 1.5% in mid-afternoon trade, while Japan's Nikkei ended up 0.5%. The UK's FTSE 100 index achieved its highest close for almost a year, rising 1.6% to close at 5124.1 points.
The US Dow Jones added 0.3% after Tuesday's 0.6% gains took it to its highest level since October 2008. Shares on Wall Street continued their rise thanks to better-than-expected industrial production data.
Investor sentiment was boosted by jumps in US retail sales in August and upbeat comments from the Federal Reserve. By the middle of the trading session in New York, the Dow Jones index was 0.6% higher at 9,737.3 points.
The Fed chairman Ben Bernanke, heartened investors, saying the US recession was now "very likely over". The Dow has risen in seven of the past eight days - if only modestly - hitting their highest levels in 2009.
US monthly trade deficit figures - which narrowed in May, but then widened in June and July - have been seen by analysts as a signal that the US recession was nearing its end. US monthly trade deficit figures - which narrowed in May, but then widened in June and July - have also been seen by analysts as a signal that the US recession was nearing its end.
I think investors should sort of catch themselves now and not get over-confident Gregg Fisher, Gerstein FisherI think investors should sort of catch themselves now and not get over-confident Gregg Fisher, Gerstein Fisher
The FTSE's rise was mirrored across Europe, where Germany's Dax had added 1.2% and France's Cac was up 1.5%. The FTSE's rise was mirrored across the rest of Europe. In Paris the Cac 40 was 1.6% higher and Frankfurt's Dax closed up 1.3%.
The main Australian share index had earlier closed up 2.2%, while Hong Kong's Hang Seng added 1.8% and India's Sensex advanced 0.8%.The main Australian share index had earlier closed up 2.2%, while Hong Kong's Hang Seng added 1.8% and India's Sensex advanced 0.8%.
Cautious noteCautious note
Official data showing that US retail sales rose 2.7% in August was warmly welcomed by the markets, because consumer spending is central to the US economy, accounting for more than two-thirds of US economic activity. The Dow had risen to its highest level since October 2008 on Tuesday, after investors were buoyed by official data showing that US retail sales had risen 2.7% in August.
It was warmly welcomed by the markets, because consumer spending is central to the US economy, accounting for more than two-thirds of US economic activity.
While the big rise was helped by the US "cash for clunkers" car scrappage scheme, which has now ended, retail sales excluding cars also increased by 1.1%, beating market expectations of a 0.4% gain.While the big rise was helped by the US "cash for clunkers" car scrappage scheme, which has now ended, retail sales excluding cars also increased by 1.1%, beating market expectations of a 0.4% gain.
However, despite the share rises, Mr Benanke warned that the US economy still faced some hurdles before it could exit recession. However, chairman of the Federal Reserve Ben Benanke in comments made on Tuesday, said that the US economy still faced some hurdles before it could exit recession.
"It's still going to feel like a very weak economy for some time," he said."It's still going to feel like a very weak economy for some time," he said.
This cautious note was mirrored by a number of analysts.This cautious note was mirrored by a number of analysts.
"Investors are always following the herd," said Gregg Fisher, chief investment officer at financial advisory firm Gerstein Fisher."Investors are always following the herd," said Gregg Fisher, chief investment officer at financial advisory firm Gerstein Fisher.
"I think investors should sort of catch themselves now and not get over-confident.""I think investors should sort of catch themselves now and not get over-confident."