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Investment analysis

Despite the terrorist attack in Bali, which saw a raft of selling in airline and tourism stocks, world equity markets remained on a powerful roll early last week, spurred on by a bout of strong corporate data.

Wall Street and the European bourses registered their strongest four-day gain in more than a decade by Tuesday&#39s close. However, the back end of the week saw the markets pause for breath amid profit-taking and corporate disappointments.

In the US, strong earnings reports from financial giants Citigroup & Bank of America and mortgage lender Fannie Mae helped the Dow Jones register a four-session gain of 13 per cent, its best performance since 1969. However, the market rally was halted by downbeat results from technology bellwether Intel and Motorola before resuming on positive news from IBM and Microsoft and strong housing data. Markets appeared to have ignored gloomy findings from the Philadelphia Federal Reserve survey on business outlook and by the end of the week the Dow Jones and S&P 500 gained near 6 per cent while the Nasdaq rose by 7.4 per cent.

Europe had its fair share of corporate news, much of it positive. Nokia said it expected to meet its target for operating margins and global sales while SAP, Europe&#39s biggest software maker reported stronger than forecast profit figures and Phillips, the region&#39s biggest consumer electronics company, reported losses had more than halved from the previous year. Despite some profit-taking, bourses performed strongly with the Dax & CAC40 gaining 7.9 per cent and 8.8 per cent respectively.

In the UK, the FTSE 100 gained 5 per cent on Tuesday and broke through the 4,000 level for the first time in a month. Strong third-quarter sales figures from Prudential helped the life insurance sector continue its three-week bounce. Over the week, the FTSE 100 gained 4.5 per cent. The FTSE 250 was up by 4.4 per cent and the Hoare Govett smaller companies index gained 4 per cent.

In Japan, bargain-hunting among the blue chips on Tuesday saw markets stage their biggest one-day gain for more than six months and on Friday a rally in tech stocks helped the Nikkei surge past 9,000, to end with a gain of 6.5 per cent.


Keydata Investment Services – The Capital Plus Account

Tuesday, 22 October 2002 Type: Tessa only Isa Aim: Growth linked to the FTSE 100 index Minimum investment: Lump sum £5,000 Maximum investment: £9,000 Catmarked: No Investment choice: 100% linked to the FTSE 100 index Charges: Implicit Commission: Initial 3% Tel: 020 7710 6906

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