FTSE surges as investors boost blue-chip stocks
Investors piled into blue chip stocks today as hefty gains on Wall Street sent the London market surging 3% ahead.
The FTSE 100 Index enjoyed its biggest one day points gain since September, closing up 165.5 points at 6306.2 and adding more than £39 billion to the value of stocks on the top flight index.
The rise was spurred on by a near-300 point rally on America’s Dow Jones Industrial Average seen on the back of hopes that the Federal Reserve will further slash US interest rates.
London’s Footsie had suffered a volatile start to the day, down more than 30 points at one stage before investors caught the upbeat sentiment on the other side of the Atlantic.
Paul Webb, chief dealer at CMC Markets, said the market was also keen to keep the FTSE 100 above the 6000 barrier after it came dangerously close to sinking below the key level earlier this month.
He said: “The prospect of further rate cuts across the Atlantic does seem to be helping provide momentum, but at the same time we’re seeing a general reluctance to push the London index back below the 6000 level with traders clearly believing that at these prices, stocks are looking like good value.”
Banks were among the biggest beneficiaries, with Barclays up 6%, furthering yesterday’s gains after it reassured on trading amid concerns over the impact of the credit crunch.
And news yesterday of a major investment in US bank Citigroup also continued to give the sector a boost.
Royal Bank of Scotland was up 5%, with mortgage bank Alliance & Leicester - which has been under pressure amid the Northern Rock crisis – also ahead, recovering recent lost ground to stand up 6%.
The late gains on the blue chip share index left no stocks in the red, with many that had been in negative territory seeing a last minute rally.
Plumbing and heating equipment firm Wolseley had been down more than 10p after its profits fell 15% in the three months to October 31 and on news it was to cut more jobs as it battles deteriorating conditions in the US. But the wider market rise helped it close up 1%.
London’s leading share index has endured heightened volatility since the summer credit squeeze took hold, which saw Northern Rock experience the first run on a UK bank in nearly 150 years.
The Footsie had begun to recover, with all-time highs almost within reach at it broke through 6700 last month, but it was sent tumbling back towards 6000 as the collapse in credit markets showed no sign of a speedy resolution.
