Newspaper article The Evening Standard (London, England)

London Traders Wary of Riding the Dow's Surge

Newspaper article The Evening Standard (London, England)

London Traders Wary of Riding the Dow's Surge

Article excerpt

Byline: MICKEY CLARK

THERE was a distinct lack of enthusiasm on the part of City investorsover the call for cheaper money and the surge in share prices overnight in NewYork, where the Dow put on 331 points, its biggest one-day gain for four years.

Shares in London were marked higher at the outset but the gains were modest byNew York standards. They later boiled over, depressed by news from the housingmarket, which pared the FTSE 100 index's lead back to 7.3 at 6313.5.

The Dow has rallied 550 points in two days, fuelled by hints that the FederalReserve may cut rates again soon. But traders in London remain sceptical on theoutlook for the US economy.

Said one market-maker: "This is an irrational market. The rallies are alwaysstronger in a bear market than they are in a bull market, and the promise offurther cuts in US interest rates would suggest the US economy is in a worsestate than most of us thought." This afternoon the Dow backtracked on some ofits gains, losing 49.20 points to 13,240.20.

Alliance & Leicester jumped 631/2p to 699p after writing off just [pounds sterling]55 million.

The price was buoyed by further bid speculation and bear closing. Bradford &Bingley rose 41/2p to 3061/4p after reassuring the City that profits for thefull year would match expectations.

Speculative buying drove Anglo- Indian Vedanta Resources up to 2275p at onestage, prompting the company to scupper speculation that it had received atakeover approach. Last week, there was talk that the Chinese had lined up abid worth 2500p a share. The price later pared back its lead to 116p at 2150p.

Galiform, the kitchen retailer that used to be part of MFI, fell 6p to 961/2pafter Dresdner Kleinwort placed a parcel of nine million shares at 99p.

There was further heavy turnover in shares of Rank Group with more than 18million changing hands as they rose 8p to 1001/4p. Earlier this week, shares ofthe Mecca bingo and Grosvenor casinos group perked up on talk that Harrah'sEntertainment wanted to bid. …

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