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Shares rise on renewed optimism Shares rise on renewed optimism
(8 minutes later)
European and Asian shares have risen strongly while Wall Street built 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 achieved its highest close for almost a year, rising 1.6% to close at 5124.1 points.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.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. By the middle of the trading session in New York, the Dow Jones index was 0.8% higher at 9,761.5 points.
The Dow has risen in seven of the past eight days - if only modestly - hitting their highest levels in 2009. The Dow has risen in seven of the past eight days - if only modestly - and is at its highest level 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.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 But there have been warnings that investors should not get too carried away while money is still being pumped into stimulus packages, which flatter the economy.
"The valuations today are such that I feel that the markets are very much fully valued," said Michala Marcussen at Societe Generale Asset Management.
"The real question is what happens when we pull away the stimulus, which we will at some point."
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 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
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.
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.
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.
"I think investors should sort of catch themselves now and not get over-confident."