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FTSE breaks 5,400 as Slovakia hints at eurozone deal

UK and European markets rally on signs of progress in Slovakia and unexpectedly strong European industrial production data.

 
FTSE breaks 5,400 as Slovakia hints at eurozone deal

UK and European markets rallied on Wednesday afternoon following hints of Slovakian agreement to the eurozone bailout fund and positive EU industrial production data.

The UK index of blue-chip shares finally broke through the 5,400 mark to close up 0.85%, or 46 points, to reach 5,433, and the Mid-250 index took on 1.62%, or 165 points, to 10,320.

Sources from the Slovakian opposition party said the country is close to resolving the political stalemate and passing the bill to enlarge the European Financial Stability Facility.  

In an address to the European parliament, Jose Manuel Barroso, president of the European Commission, hinted that a plan to solve the eurozone debt crisis was forming and called for the region to ‘urgently strengthen the banks’.  

Will Hedden, sales trader at IG Index, said that the third day of low-volume trading has given the FTSE a leg-up in the day’s trading and that ‘events in Slovakia are being perceived as a mere speed-bump’.

Positive eurozone data also boosted confidence in the market as figures showed an unexpected increase in European industrial production of 1.1%, with growth coming from France and Portugal.

Other stock markets in Europe also made gains on the positive news: Germany’s DAX index added 2.21% to 5,994, France's CAC 40 index took on 2.42% to 3,229, and the FTSEurofirst 300 index of top European shares made gains of 1.5% to 976.

On Wall Street markets jumped on the announcement of a possible resolution to Slovakia’s political stalemate on the eurozone fund.

The Dow Jones Industrial Average added 1.12% to 11,544, the Standard & Poor's 500 index gained 1.47% to 1,213, and the Nasdaq Composite index rose 1.51% to 2,622.

US markets are sure to react to the release of the long-awaited Federal Open Markets Committee minutes at 7pm on Wednesday evening, which should indicate if more quantitative easing is in store for the US.

Also in Wednesday trading media-research business Aegis (AEGS.L) made gains of 4.4p, or 3.35%, to 135p as it sold its market research company, Synovate, to Ipsos. It will issue a special dividend to shareholders as £200 million has been returned to the company.

Citywire Top Stock Burberry (BRBY.L) added 44p, or 3.48%, to £13.08. Desire Petroleum (DES.L) continued to make the biggest gains on the all-share index, adding 3.75p, or 21.74%, to 21p with the announcement of its drilling deal with Rockhopper in the Falklands.

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1 comment so far. Why not have your say?

Chris B (Slough UK)

Oct 12, 2011 at 19:20

EFSF making their liability, your liability, a blank cheque to no-where.

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