Markets reassured by latest US inflation data

European shares made steady gains yesterday and Wall Street ended higher after US inflation data matched market expectations, easing concerns that the Federal Reserve might sharply increase interest rates next month.

However, the Irish stock exchange failed to join in the gains, with the ISEQ index of Irish shares easing back.

Share prices on Wall Street jumped in opening trading, an hour after the release of data showing US consumer prices up by 0.4 per cent in September, directly in line with consensus forecasts.

Last night, having risen by up to 160 points at one stage, the Dow Jones index of Wall Street shares ended up more than 88 points at 10,204, a rise of 0.88 per cent.

The markets, having survived yesterday's 12th anniversary of the 1987 Black Monday crash, may be helped today by news, after Wall Street closed, that Microsoft profits jumped by 30 per cent in the last quarter, boosted by "awesome demand" for personal computers, which is expected to continue.

The world's biggest computer software company posted net income (after-tax profits) of $2.19 billion (€2.02 billion) or 40 cents per diluted share for its fiscal first quarter ended September 30th, up from $1.68 billion or 31 cents per share a year earlier. Revenues (turnover) rose 28 per cent to $5.38 billion from $4.19 billion. The news pushed Microsoft shares up by almost $2.5 per share to $88.75 in after-hours trading.

Earlier, analysts said the US consumer inflation report could be the last piece of data the Federal Open Market Committee (FOMC) will be looking at before it meets again on November 16th to decide on interest rates. Markets are still split on whether the FOMC will raise rates.

Shares around the world made large losses last week after stronger-than-expected US producer prices data and a stern warning from Greenspan about the dangers of a stock market price bubble.

European shares were higher across the board yesterday, roughly doubling the morning's gains after the US data.

Among leading European blue-chip bourse indices, London's FTSE 100 was up 1.7 per cent and Frankfurt's DAX was up 2.7 per cent. However, in Dublin, the ISEQ index edged down by 11.8 points to 4,631.7. Some of the main industrial stocks managed to claw back some of the losses of recent days, with CRH adding 40 cents to €18.05, but financial shares had a mixed day.