Stock market surges by £27bn over renewed confidence in US

The London market surged 1.6 per cent – or 107.7 points – to 6762 as stock markets around the globe resumed their rally after data showed confidence in America’s vast consumer sector is at five-year highs.

Markets shrugged off last week’s fall – triggered by hints the US Federal Reserve could scale back its vast money-printing drive – as investors ploughed back into shares.

In New York, the Dow Jones Industrial Average raced ahead by 1.2 per cent in early trade after figures revealed consumer confidence had hit its highest level since February 2008.

Wall Street was also boosted by encouraging data on the US housing market.

Markets in Europe had also been spurred on by talk of more stimulus by the European Central Bank and the Bank of Japan, with the Dax in Frankfurt and the Cac 40 in Paris sharply higher, following overnight gains on China’s Hang Seng and the Nikkei in Japan.

The FTSE’s return to winning ways lifted it nearer its all-time closing high of 6930.2 points – set in December 1999 during the dotcom boom. All but seven stocks advanced on the FTSE, equating to a £27.4bn gain in the value of the blue-chip index.

Viktor Nossek, head of research at financial products firm Boost ETP, said: “The FTSE 100 emerged from the Bank Holiday weekend with a bang.

He added: “All this despite Britain’s meagre rate of GDP growth. But these days, a strong economy is no longer a pre-requisite for strong profits.”

Stock markets have powered ahead over the past year as vast money-printing drives by central banks push investors out of low-yielding government debt into riskier assets such as shares.

Record-low interest rates have also fuelled the stock market rally as investors look for other places to park their cash to escape the eroding effect of high inflation.