Yesterday's trading: Warren Buffett lifts spirits
Billionaire investor Warren Buffett, often dubbed the 'Sage of Omaha', sent shivers through world stock markets last year when he described the financial crisis as an 'economic Pearl Harbour'.
Eye on the market: Geoff Foster
Yesterday, he gave cash-rich fund managers a much warmer feeling and had them scrambling for quality stock after revealing that his Berkshire Hathaway investment company is now a big buyer of equities.
Why? Because the US economy has 'hit a plateau at bottom'.
His comments followed Federal Reserve chairman Ben Bernanke's proclamation that the US recession is all but over. And, Bank of England Governor Mervyn King said there are signs that the UK economy is growing again.
Dancing higher on the conveyor belt of upbeat views from the men that matter, the fabulous Footsie forged further ahead to close 82 points up at a 13-month high of 5,124.13, while the FTSE 250 climbed 141 points more to 9,305.24.
Wall Street joined the party with an early gain of 78 points helped by a rise in US industrial production in August. It is the first time dealers in New York have seen two back-to-back positive months since December 2007.
The latest Merrill Lynch Fund Manager Survey for September added to the buoyant mood. It revealed that investors remain optimistic that the global economy is moving out of recession and towards the 'Goldilocks' scenario where conditions are neither too hot nor too cold.
Felix Wintle, head of US equities at Neptune Investment Management, said: 'We believe that the macro data coming out of US, China, Europe and Japan will continue to beat expectations and that corporate earnings will also continue to surprise investors to the upside. The most likely direction for global stock markets is up for the remainder of 2009'.
One leading fund manager suggested that yesterday's strong gains owed much to investors being squeezed tight ahead of tomorrow's potentially dangerous ' triple-witching' expiry of stocks, indices and traded funds.
Just before the close, shares of the London Stock Exchange soared to 906.5p amid talk of a multi-billion-pound cash bid from the Deutsche Borse. A rumoured denial from the German exchange left the close at 860.5p, still 52.5p up on the day.
The LSE has splashed out £18m to bring the market's key trading technology back-in-house. It has acquired MillenniumIT, a Sri Lankan-based technology services company serving the capital markets industry.
Increased market activity and hopes for a good final quarter lifted giant derivatives and money broker ICAP 25.1p to 434.3. Infrastructure software group Autonomy jumped 72p to 1510p after launching its Structured Probabilistic Engine software, which enables organisations to unlock the 'meaning' in databases.
Rumours of a pending rights issue to help pay down debt dragged civil engineer Balfour Beatty 7p lower to 344p.
News of chief executive Mark Selway's sudden departure to be replaced by finance director Keith Cochrane in November, prompted nervous selling of Weir Group, 20p off at 678p.
KBC Peel Hunt advised clients to buy on weakness as the transition has been on the cards for the past two years. Selway is returning to Australia and his family to take up a chief executive role at Boral, the country's largest building and construction material supplier.
Kitchen manufacturer Galiform advanced 4.15p to 68p on talk of a bid from Wickes DIY group Travis Perkins, 6.5p better at 795.5p.
PR consultancy City of London Group soared 14.5p to 55p and Vero Software 6p to 20.5p after receiving takeover approaches. Central African Mining & Exploration eased 0.75p to 18.75p on disappointment with the proposed 20p-a-share bid terms from k.
Despite successfully renegotiating £15m worth of convertible bonds, Radicle Projects closed flat at 6.62p. One dealer said this makes the shares look dirt cheap. They are still trading at a massive discount to net asset value of 25p-plus.
After reporting a successful flow test at its Sorrento Salt Dome well, onshore Louisiana, Leed Petroleum was unchanged at 13p. Gulf Keystone, which shot up last month after the announcement of a 'value-transforming' discovery in Kurdistan, put on 3.25p to 71.25p.
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