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Markets gain on new year optimism Markets gain on new year optimism
(41 minutes later)
New year optimism on the financial markets, together with rising commodity prices, has nudged share indexes higher on the first day of trading of 2010.New year optimism on the financial markets, together with rising commodity prices, has nudged share indexes higher on the first day of trading of 2010.
The FTSE 100 index hit a fresh 16-month high, at 5,452 by lunchtime, while France's Cac 40 was up by more than 1%. The FTSE 100 index hit a fresh 16-month high, at 5,500, while France's Cac 40 and Germany's Dax indexes were up 1.5%.
In Tokyo the Nikkei 225 reached a 15-month high, while in the US the Dow Jones was up 1.3% in early trading.In Tokyo the Nikkei 225 reached a 15-month high, while in the US the Dow Jones was up 1.3% in early trading.
The continued rise in commodity prices meant mining companies were among the biggest gainers.The continued rise in commodity prices meant mining companies were among the biggest gainers.
On the FTSE, BHP Billiton was up 2.5% by mid afternoon, while Anglo American was also up more than 2%. On the FTSE, Eurasian Natural Resources was ahead by 4.92% at close, while Vedanta Resources was ahead by 4.79%.
Shares in partly-nationalised Royal Bank of Scotland rose 9.9%, helped by a rating upgrade to "outperform" fromanalysts at Exane BNP Paribas.
Metals continued their recent rallies, with copper prices reaching a 17-month high on Monday on the back of industrial action in Chile.
Oil companies also benefitted as world oil prices broke through $80 a barrel earlier before falling back slightly.Oil companies also benefitted as world oil prices broke through $80 a barrel earlier before falling back slightly.
BP and Shell both saw big rises on the FTSE, while in New York ExxonMobil and Chevron were also up in early trading.
Manufacturing boost
Positive economic data from China, Europe and the US also added to the optimistic mood.Positive economic data from China, Europe and the US also added to the optimistic mood.
Figures from China, the UK and the US all showed the manufacturing sectors in each country expanding at faster rates. In China, manufacturing data showed the sector growing by the biggest margin in five years, while UK manufacturing saw the fastest pace of growth in two years.
That picture was echoed in the US, where data from the Institute for Supply Management showed that the manufacturing sector grew for the fifth straight month in December, and at the fastest pace for more than three years.
But Henk Potts, market strategist at Barclays Wealth, said that investors were less interested in macroeconomics and more concerned with the outlook for individual businesses.
"The corporate picture is looking a lot better for 2010, and the market is still undervalued," he said.
He added that investors should be impressed at the pace at which businesses have been returning to profitability.