Market News

 July 23, 2009
Shares close at six-month highs

 Leading US and UK shares jumped on the back of good corporate and economic news and closed at their highest levels for more than six months.

The Dow Jones index closed above 9,000 for the first time since January, up 188 points, or 2.1% on the day.

The FTSE 100 index closed up 66.07 points, or 1.5%, at 4,559.80, also its highest level since January.

Traders were buoyed by figures showing a bigger-than-expected jump in US home sales and profits at carmaker Ford.

The Dow Jones closed at 9069.29.

Elsewhere, France's Cac 40 index rose by 2% while Germany's Dax climbed 2.5%.

Beating forecasts

Driving shares up was the news that sales of previously-owned US homes rose for the third month in a row in June, and at a quicker rate than expected.

The National Association of Realtors said sales rose 3.6% to an annual rate of 4.89 million last month, up from 4.77 million in May.

Ford also posted a better-than-expected quarterly profit of $2.3bn (£1.4bn).

Other companies that announced results that beat analysts forecasts were communications giant AT&T, conglomerate 3M and sweet maker Hershey.

3M was the day's biggest winner, climbing 6.4%.

"I don't think the market is signalling that we are fully healed at all, but it is telling us that there is a strong likelihood that a recovery is under way," said Ciaran O'Kelly at Nomura Securities in New York.

Technology giant Microsoft and online retailer Amazon announced disappointing results after the market closed.

Mining strength

In the UK, traders were also buoyed by figures showing a much bigger-than-expected jump in UK retail sales in June.

"Today's strength has the FTSE back at its best level for more than six months and sees the index cracking the 4,500 barrier that had stopped so many rallies since early May," said Anthony Grech at IG Index.

The top five winners were all mining companies - Kazakhmys climbed 9.5%, Eurasian Natural Resources 8.9%, and Vedanta Resources, Fresnillo and Xstrata all gained more than 7%.

Following regulator Ofwat's proposals on reducing water bills between 2010 and 2015, a number of water companies lost ground.

All eyes will now be on Friday's UK GDP figures. If these are worse than expected, then the FTSE will certainly give up some of its recent gains, analysts say.

"A weak number has the potential to derail the recent rally and bring things crashing down to earth," said Jimmy Yates at CMC Markets.

Story from BBC NEWS