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FTSE rebounds above 5,400 on US data and euro hopes

Gold rises back above $1,600 and sterling jumps against the dollar after a successful Spanish debt auction and upbeat US housing data.

 
FTSE rebounds above 5,400 on US data and euro hopes

Britain’s FTSE 100 rebounded above the 5,400 mark on Tuesday, on better-than-expected US housing data and as fears over the eurozone’s debt crisis eased temporarily.

The UK index of blue-chip shares strengthened 1.02%, or 55 points, to 5,419 and the All Share index improved 0.98%, or 27 points, to 2,780. See the FTSE’s performance and the index’s top winners and losers

Aggreko (AGGK.L) topped the leader board on the index, advancing 122p to £19.70, on the back of positive broker comment from Citigroup following an upbeat statement on Monday.

Engineers dominated the leader board, amid hopes for global demand. Citywire Top Stocks Weir Group (WEIR.L) and GKN (GKN.L) added 73p to £19.91 and 5p to 176p respectively, while Meggitt (MGGT.L) advanced 13p to 350p.

AstraZeneca (AZN.L) was the biggest loser, shedding 44p to £29.05, after the pharmaceuticals group said two of its pipeline drugs performed poorly in late stage clinical trials.

Gold back above $1,600

Official figures showed earlier that new home building in America rose sharply in November: the home starts survey suggested an annualised rise of 685,000, up 9.3% from a month earlier. And the number of building permits also increased 5.7% to 681,000, the most issued since March last year.

‘This was a good report,’ said Patrick Newport and Michelle Valverde, economists at IHS Global Insight, in a note.

‘It has supporting evidence that the single-family market is finally getting off the mat and that the multi-family segment is continuing to make small strides, and that we should expect good housing starts numbers in the upcoming months.’

Following the data, the Dow Jones Industrial Average surged 2.27% to 12,034; the Standard & Poor's 500 index hardened 2.63% to 1,237; and the Nasdaq Composite index was 2.64% higher at 2,590.

Meanwhile, commodity prices advanced, with Brent crude for delivery in next month jumping 3.15% to $106.9 per barrel and gold prices gained 1.3% to $1,614 an ounce.

Spanish borrowing costs fall

European markets also bounced, Spain's borrowing costs dropped sharply at an auction of new three- and six-month government bonds bills and a survey showed that German business morale improved in December.

Other stock markets in Europe also gained: Germany’s DAX index jumped 3.09% to 5,846; France's CAC 40 index climbed 2.73% to 3,055; and the FTSEurofirst 300 index of top European shares moved 1.86% north 975.

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2 comments so far. Why not have your say?

William Bishop

Dec 20, 2011 at 21:47

Risk off, risk on, risk off, risk on, etc. etc. Wotta bore.

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Keith Snell

Dec 20, 2011 at 23:52

As long as there are funds willing to buy Spanish risk at modest returns and others of the same ilk the longer they have to reduce their public sector which is too large and look for ways of growing their private sector, if this has occured to them. However this does not solve the underlying eurozone financial problems it merely buys a little time for Spain.

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