A bright opening on Wall Street after new jobs data has lifted the London market out of the doldrums.
US jobless claims fell by 21,000 last week to 530,000, when analysts had been expecting an increase. It's only a small sign that things may be getting better on the employment front, but it has proved enough to pull stock markets back into positive territory after earlier falls.
So with the Dow up around 40 points in early trading, the FTSE 100 has reversed an earlier loss of nearly 50 points and has moved up 9.10 points to 5148.47. The initial uncertainty was in part prompted by cautious comments from Bank of England governor Mervyn King, but also by the US Federal Reserve hinting it might be slowing its stimulus programme. Joshua Raymond, market strategist at City Index said:
"We are in a bit of a catch 22 situation right now. The better the economic picture gets the more optimistic we become and buy equities. But on the other side, the less the need for the extraordinary interventions by the central banks that gave all investors a degree of reassurance. In the long run the markets need to start operating with normality and the only way to test this is for the central banks to start scaling back quantitative easing. The problem investors may be having right now is that they simply are not ready for that test.
"Investors in Europe have taken the slowing of debt purchases by the Fed as a concern that this may be a too soon a move."
