European stock markets recorded solid gains yesterday, powered by a strong opening on Wall Street after a government research body said the US economy emerged from an 18-month recession in June 2009.
Investors also focused on the US Federal Reserve, whose policymakers convene today and who could offer an insight into prospects for US momentum.
The London FTSE 100 index added 1.71 per cent to close at 5,602.54 points while in Paris the CAC 40 rose 1.77 per cent to 3,788.01 points. The Frankfurt DAX gained 1.37 per cent to 6,294.58.
US share prices were also well supported, with the Dow Jones Industrial Average up 1.01 per cent at 10,715.17 at midday. The tech-heavy Nasdaq had gained 1.16 per cent to 2,342.38 points.
The US markets surged upward in late morning trade after the National Bureau of Economic Research said the US economy had shaken off its recession in June 2009, ending the most sustained downturn since World War II.
It came on the back of a strong multi-session rally spurred by a brighter economic outlook.
Last week Wall Street flirted with its highest levels since May, boosted by new data easing concerns over the recovery.
For the week, the Dow Jones Industrial Average was up 1.39 per cent.
Joshua Raymond, an analyst at trading firm City Index, said investors were in addition eagerly awaiting a Fed announcement today.
“The market is expecting no change on interest rates and there is likely to also be a ‘watchful stance’ on economic data before deciding upon extra stimulus to maintain the US recovery,” he said.
“Were the Fed to announce extra stimulus measures at tomorrow’s meeting, this would give the markets a fairly big surprise, particularly in light of last month’s strong non-farm and private payrolls data.”
Members of the Fed’s policymaking panel will gather for the last time before November’s mid-term elections, with the economic outlook transformed since their last meeting from apocalyptic to vaguely promising.
European investors took in stride a survey released yesterday showing that US real estate sector confidence was stable in September, albeit at a low level. The market had expected a slight improvement.
Analyst Jean-Louis Mourier of brokers Aurel BGC said the findings suggested that the US housing sector, which was at the heart of the economic crisis, had yet to show signs of a rebound.