Fresh signs the giant US economy is gaining momentum drove major world stock markets higher today, with activity likely to be thin in the last session before the Christmas holiday.
Market action will be limited until early January with any gains likely to prove short-lived in Europe, where policymakers are no closer to resolving the region's two-year-old debt crisis.
US stocks rose at the open, with the S&P 500 on track for a fourth straight day of gains as modest durable goods and consumer spending data was not enough to dampen optimism the US recovery remained on track.
The Dow Jones industrial average was up 32.92 points, or 0.27 per cent, at 12,202.57. The Standard & Poor's 500 Index rose 3.85 points, or 0.31 per cent, at 1,257.85. The Nasdaq Composite Index added 7.04 points, or 0.27 per cent, at 2,606.49.
The Iseq rose 1 per cent, and Britain's leading share index posted solid gains on the final half-day trading session
before Christmas, with technical factors the main driving force ahead of the long holiday. At the close, the FTSE 100 index was up 55.73 points, or 1.0 per cent, at 5,512.70, extending the previous session's 1.3 per cent rise and pushing further above the key 50-day moving average of around 5,450.
Volume, however, was just 22 percent of the 90-day daily average, and technical analysis of the index remained
cautious.
"While its recent price action has nudged it up through its 50-day moving average the fact remains that the UK index is stuck in a downtrend that has been keeping it in check since July and it would have to break decisively through 5,600 for that situation to change," said Bill McNamara, technical analyst at Charles Stanley.
The euro fell 0.1 per cent to a session low against the dollar of $1.3032 in thin trade and is likely to remain pressured with the euro zone crisis unresolved.
"The dollar is still seen as a funding currency when risk appetite improves and people will sell dollars on the back of that," said Chris Walker, currency strategist at UBS.
"But we still see uncertainties in the euro zone outweighing and look for a move towards $1.25 in the next few months," he added.
Weekly US initial claims for state unemployment benefits dropped 4,000 to 364,000, yesterday's data showed, the lowest level since April 2008 and just a month after the collapse of Bear Stearns.
The Thomson Reuters/University of Michigan's sentiment index rose to 69.9 from 64.1 in November as measures of both current conditions and future expectations increased.
MSCI's world equity index gained around 0.3 per cent since the data was published, but remains on track for a fall of about 12 per cent in 2011.
The pan-European FTSEurofirst 300 index gained around 0.6 per cent.
The ECB's first tender of ultra-cheap three-year loans on Wednesday, which saw 523 banks gorge on a total of €489 billion, has failed to win the single currency much support.
But despite the long-running debt crisis, the euro is only down around 2.4 per cent for the year, having found support from higher ECB interest rates in the first half of 2011 that pushed it to a year high near $1.50 in May.
"People are diversifying away from US dollars and that's what it comes down to," said David Scutt, a trader at Arab Bank Australia in Sydney. "Despite the fact the US economy is strengthening, there are still expectations in the marketplace that the Fed has showed it's very keen to print at the best of times, and that's helping the likes of the euro."
The US Federal Reserve has kept interest rates near zero for more than three years and has signalled it will keep them there through at least mid-2013. It has also bought $2.3 trillion in long-term securities to push down borrowing costs.
Reuters
