Figures showing that US employee costs grew more slowly than expected, led to substantial gains on world markets yesterday.

The figures were interpreted as indicating that an interest rate rise by the Federal reserve at its May 19th meeting was now less likely. This brought relief to a market which feared a rate rise following remarks from some Fed governors that the US economy needed to slow down.

The US stock markets bounded ahead after the recent weakness, and at the close last night the Dow Jones index was 9063.37, a rise of 111.85. European stock markets reacted quickly to the US economic figures and in London the FTSE-100 index gained almost 2 per cent to close up more than 95.2 points on 5928.3. The Dublin market was slower to react, but the ISEQ Overall Index still closed ahead more than 30 points on 5329.47.

Other figures showed the US economy unexpectedly picking up speed and growing at a brisk 4.2 per cent rate in the first quarter on strong consumer spending, while inflation remained at its lowest level in 35 years.