Europe’s leading stock markets leapt yesterday in a robust start to the new year following a mixed 2010 amid the eurozone’s lingering debt crisis.

London’s FTSE 100 soared 2.33 per cent to 6,037.53 points early on its first trading day of 2011, after sharp gains for the Frankfurt and Paris stock markets on Monday.

“The FTSE 100 started the year with a bang,” said Joshua Raymond, an analyst at City Index trading group.

“While inevitably some may be drawn to the positive start as a signal of intent by investors for 2011, the FTSE is playing catch up to US and European markets which closed higher yesterday, and investors are buying back into the oversold falls suffered on Christmas Eve.

“Make no mistake however, it’s another strong start to the year for the UK markets,” he added.

Investors in London shrugged off an increase in Britain’s standard rate of sales tax, or VAT, to 20 per cent – one of several government moves aimed at slashing a record public deficit.

Finance minister George Osborne insisted that the rise from a rate of 17.5 per cent starting yesterday was a “reasonable” step towards economic recovery and would raise £13 billion (€15.1 billion) per year.

In Frankfurt, the DAX 30 index climbed 0.31 per cent to 7,011.05 points and the Paris CAC 40 advanced 0.71 per cent to 3,928.67 points by mid-day.

The Stoxx 50 index of leading eurozone companies advanced by 0.63 per cent to reach 2,857.45.

Wall Street stocks kicked off their year on Monday with strong gains as confidence in the US economic recovery was bolstered by new manufacturing data.

After two weeks of languid holiday trade, investors returned to the trading floor in high gear, with the Dow Jones Industrial Average rising 0.81 per cent to close at 11,670.75 points.

Howard Wheeldon, an analyst at BGC brokers, noted that the US economy was “back on the front foot”.

He said: “True, during this year we may expect that like other global markets US equities and bonds will be affected to a greater or maybe lesser extent by following moves in the burgeoning European sovereign debt crisis.”

He added: “Perhaps though by not nearly as much as European markets themselves might be hit. While some European events do hurt US market confidence it is reasonable to say that the US economy is far less impacted by events that occur over here in Europe.”

In Asia yesterday and boosted by the rally on Wall Street, Tokyo’s Nikkei marked the highest close since May, rising 1.65 per cent to 10,398.10 points on its first trading day of 2011.

Wall Street treads water ahead of Fed minutes

US stocks treaded water yesterday as investors awaited the release of minutes of the Federal Reserve’s last meeting to gauge the health of the economy after upbeat data on factory orders.

After opening the year with strong gains on Monday, the Dow Jones Industrial Average rose 12.07 points (0.10 per cent) to 11,682.82 by 1545 GMT.

The S&P 500 index, a broader measure of the market, was down 2.82 points (0.23 per cent) to 1,269.02, while the tech-rich Nasdaq declined 2.61 points (0.10 per cent) at 2,688.90.

“Despite gains in Europe and Asia on improved global economic optimism, the US equity markets are nearly unchanged in morning action ahead of the midday release of the minutes from the Federal Reserve’s December monetary policy meeting,” analysts at Charles Schwab said in a client note.

The Federal Open Market Committee decided in its meeting last month to maintain record-low interest rates and its massive asset-purchasing program in a bid to boost the sluggish economic recovery.

Shortly after the opening bell, the Commerce Department reported that factory orders for November rose 0.7 per cent, beating analysts’ forecast of a 0.3 per cent fall in orders.

Investors were also waiting for the release of the December sales figures from US automakers.

Wall Street stocks closed with strong gains on Monday as confidence in the US economic recovery was bolstered by new manufacturing data showing activity expanded for the 17th straight month in December.

In corporate news, telecom-munications equipment giant Motorola split into two companies yesterday: Motorola Mobility, focused on mobile phones and computers, and Motorola Solutions, which provides services to governments and large enterprises.

Shares of Motorola Mobility jumped 7.5 per cent while those of Motorola Solutions slipped 0.05 per cent.

The bond market was little changed.

The yield on 10-year Treasuries remained stable at 3.34 per cent, while that of the 30-year bond was up to 4.42 per cent from 4.40 per cent on Monday. Bond prices and yields move in opposite directions.

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