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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 Tuesday's gains, after the latest signs of US economic recovery. | |
The UK's FTSE 100 index achieved its highest close for almost a year, rising 1.6% to close at 5124.1 points. | |
Shares on Wall Street continued their rise thanks to better-than-expected industrial production data. | |
By the middle of the trading session in New York, the Dow Jones index was 0.6% higher at 9,737.3 points. | |
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 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 Fisher | I think investors should sort of catch themselves now and not get over-confident Gregg Fisher, Gerstein Fisher |
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 note | Cautious note |
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, 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." |