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Investment Analysis

More positive economic data from the US pushed concerns over the Enron effect firmly to one side last week and helped drive global markets higher. The representative FTSE World index gained a solid 3.9 per cent.

In the US, lead indicators, which all point to an economic recovery, bolstered US stocks, with the Dow, the S&P 500 and the Nasdaq 100 gaining 2 per cent, 2.9 per cent and 8.3 per cent respectively. The latest evidence of an upturn came on Friday, with labour figures for February showing the first rise in employment since July last year. The Fed&#39s beige book, a summary of regional economic conditions, was more upbeat than previous reports. Fed chairman Alan Greenspan said the US expansion was “well under way.”

As expected, both the European Central Bank and the Bank of England left base rates unchanged. European and UK markets were given fresh impetus from US data last week. The FTSE Eurotop 300 pushed ahead by 2.9 per cent.

In Germany, the momentum from the previous week, which saw the Dax gain more than 7 per cent on better than expected business sentiment figures, continued, with the index up by 5.1 per cent. Large-cap tech shares have performed well recently but smaller stocks on Germany&#39s Neuer Markt have yet to feel any upthrust. Europe&#39s premier tech index celebrated its fifth birthday and stands at just over 1,000, having peaked at more than 8,000 two years ago.

In the UK, US employment data lifted the FTSE 100, to end up by 2.3 per cent. Invensys gained 14 per cent, followed closely by British Airways, which was up by 13.8 per cent.

In Japan, the market shrugged off data confirming the economy had shrunk for the third consecutive quarter and focused on the US economic revival and continued support provided by short-selling regulations. Shares in Tokyo extended their rally to a seven-month high, with the Nikkei 225 gaining an exceptional 9.9 per cent. The index is up by 26.2 per cent from its low hit on February 6.

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