Tuesday May 5, 12:57 PM
London stocks shoot higher after holiday
LONDON (AFP) - The London stock market jumped to its highest levels since mid-January on Tuesday, boosted by surging banking shares, as traders returned to work after a public holiday in Britain.
Frankfurt and Paris also gained but not so sharply as on Monday.
In late morning trading, London's FTSE 100 index of leading shares was showing a surgte of 3.04 percent to 4,372.40 points.
"The FTSE 100 has now rallied 25 percent in just under two months' trading," said Joshua Raymond, market strategist at City Index.
"This means that the case for the start of a new bull market cannot be ignored. However, we must remain cautious as there are still potential obstacles down the line, such as Thursday's stress tests."
Analysts said "stress tests" on Thursday on the 19 biggest US banks which have received public aid to help them weather the global financial crisis may jolt investor risk appetite.
US banking regulators and the Federal Reserve are due on Thursday to release results from the tests, which measure the banks' financial stability.
In other European stock market trade Tuesday, Frankfurt's DAX 30 (Xetra: news) gained 0.45 percent to 4,924.44 points nearing the half-way mark and in Paris the CAC 40 (Paris: news) climbed 0.53 percent to 3,255.13 points.
The DJ Euro Stoxx 50 index of leading eurozone shares advanced 0.64 percent to 2,434.99 points.
The European single currency stood at 1.3373 dollars.
"The FTSE is playing catch-up this morning after the UK Bank holiday and a rally from US indices saw the S&P 500 (news) and Dow recover to levels just below where they commenced the year," said Simon Denham, chief analyst at London-based financial betting firm Capital Spreads.
US stocks had surged to the highest levels for months on Monday as sentiment was lifted by a surprisingly upbeat report on US home sales and Chinese data that raised hopes for a global economic recovery.
The Dow Jones Industrial Average rallied 2.61 percent to close at 8,426.74 points, as the blue-chip index hit its highest level since January 13.
The tech-heavy Nasdaq (NASDAQ: news) lifted 2.58 percent to 1,763.56, its best close since last November.
The Standard & Poor's 500 climbed to its best close since January 8 with a gain of 3.39 percent to 907.24 points that put the broad-market index into positive territory for the year.
The S&P index is now up 0.44 percent for 2009, which after the long bear market "could help to bolster confidence," said Nick Perry at Schaeffer's Investment Research.
In Frankfurt, the Dax index had fallen by 23.78 percent from the opening of trading at the beginning of the year to a low point on March 6. Since then it has rallied by 33.71 percent and now shows a gain so far this year of 1.75 percent.
The CAC 40 index in Paris had fallen by 21.71 percent to a low point on March 8 at the close, and since then has rallied by 28.46 percent to show a gain so far this year of 0.50 percent.
In Asia, Tokyo remained shut until Thursday owing to a three-day public holiday in Japan. Hong Kong share prices closed 0.3 percent higher on Tuesday, as investors took a breather following the bourse's recent surge, dealers said.
In Europe, focus was on the recovering banking sector. In Switzerland, UBS (Virt-X: UBSN.VX - news) gained 3.95 percent to 16.33 Swiss francs as the bank did not surprise the market with worse-than-expected results data.
UBS however warned it could be hit by more non-performing corporate loans amid the slowing Swiss economy after reporting quarterly losses of more than a billion euros. The Swiss Market Index dipped 0.23 percent to 5,307.56 points.
In London, emerging markets bank Standard Chartered (LSE: STAN.L - news) soared 11.3 percent to 1,180 pence after reporting record income and profit during the first quarter in a trading update published Tuesday that did not provide exact figures.
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