European shares markets have recorded further strong gains, with optimism rising of another reduction in interest rates in Britain and across the euro zone.
The FTSE 100 index celebrated the opening of the new tax year by closing at an all-time high yesterday as interest rate optimism, a late inflow of personal equity plan cash and the strength of Wall Street combined to push share prices higher.
Britain's blue chip benchmark gained 85.3 to 6,415.3, after reaching a new intra-day peak of 6,443.9 earlier in the day. London's strength was echoed by other European markets, with the DAX in Frankfurt gaining 2.5 per cent and the CAC-40 in Paris 1.8 per cent. In Dublin, the ISEQ index of Irish share prices added 1.4 per cent to close at 5362.74, with the main bank stocks gaining significantly.
Wall Street's rise on Monday, when the Dow Jones Industrial Average regained the 10,000 level, gave an opening lift to the European bourses, although the Dow fell in early trading yesterday and closed last night at 9,963.49, down 43.84 points.
Traders were also hopeful that interest rate cuts might be announced later this week. The Bank of England's monetary policy committee is widely expected to reduce the repo rate by a quarter of a percentage point on Thursday; investors are less confident, but still hopeful, that the European Central Bank cut will cut rates by a similar amount.
The FTSE's surge was the latest stage in a rally that has carried the index up from 4,648 in early October, when worries about the British and world economies were at their height.
The last burst of strength in the British market was aided by private investors racing to put money into personal equity plans, which were abolished at the end of the 1998-99 tax year. Plan managers would still have been putting that cash into the market yesterday.
The unilateral ceasefire declaration by Yugoslavia caused only a slight ripple in equity markets but did prompt the euro to rise a cent and a half in less than an hour against the dollar yesterday. Dealers who had sold the currency in the expectation of its falling further quickly bought euros to cover their positions, driving it higher.
