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Investment analysis

Better than expected corporate news resulted in a surge in global equities on Friday, leaving many of the world&#39s stockmarkets higher over what had otherwise been another difficult week.

In the US, the Dow Jones surged by 316 points on Friday as investors reacted to positive results from General Electric and a more optimistic tone from technology bell weather IBM. Meanwhile, the market chose to ignore disappointing retail sales figures and the latest survey showing US consumer confidence at its lowest level for nine years.

Over the week as a whole, the Dow Jones and S&P 500 both rose by 4.3 per cent while the Nasdaq leaped by 9.2 per cent on the back of a sharp rally in technology stocks.

In the UK, the FTSE 100 drifted lower for much of the week until a 5 per cent surge on Friday left the index up by 3.7 per cent over the week as a whole and within striking distance of the 4,000 level. However, the response of the second liners and small caps was more muted, with the FTSE 250 ending the week just 0.1 per cent higher while the Hoare Govett smaller companies index lost a further 3 per cent.

Across Europe, equity markets enjoyed a welcome respite, with stocks making gains across the board on Friday in response to Wall Street&#39s surge. Over the week as a whole, the FTSE Eurotop 300 index gained 3.5 per cent, helped by an 8 per cent surge in the German Dax and a jump of 4.9 per cent in the French CAC40.

In Japan, shares fell to a fresh 19-year low before recovering slightly on Friday as overseas investors dumped stock on concerns over the country&#39s fragile banking system and the continuing decline in share prices in the US.

The fact that the Bank of Japan unanimously voted to keep its monetary policy unchanged also disappointed investors, leaving the Nikkei 225 at just over 8,500, a loss of 5.5 per cent over the week. Elsewhere in the Far East, Hong Kong&#39s Hang Seng index fell by a further 3.9 per cent.

In the bond markets, US Treasuries gave up some of their recent gains, with prices dropping sharply on Friday as equity markets rallied. By the end of the week, the 10-year note was yielding 3.8 per cent while the yield on 30-year notes rose to just over 4.8 per cent.


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