Markets thrive on positive US data

EUROPE'S major bourses extended record highs yesterday, celebrating exceptionally positive US inflation data and a rampant Wall Street.

New data showed US retail sales rising a modest 0.2 per cent and consumer prices rising only 0.1 per cent in August despite real earnings up 0.7 per cent, severely undermining expectations of an imminent rise in US interest rates.

A rise in interest rates had been widely expected from a meeting of the US Federal Reserve's Federal "Open Market Committee on September 24th.

European bourses hailed the news, with Frankfurt and London pushing their indices to new highs band holding their gains as Wall Street joined the party in the European mid-afternoon smashing its May 22nd record. "It appears we have the best of both possible worlds - good, modest economic growth and the absence of inflationary pressures," said Value Line Asset Management chief investment officer, Mr Philip Orlando.

By the close, the Dow Industrial average was up xxx 66.58 points, London was up 35 points, Frankfurt was up 25 points, and the IBIS DAX had broken the lofty 2,600 level.

Although far from breaking records, Paris's CAC-40 also relished the US news, reversing morning slippage and pushing ahead a solid 15 points by late afternoon.

US, German and British government bonds all rallied on the US inflation news, with the US Treasuries gains helping to limit losses the dollar may have suffered from the sudden evaporation of interest rate increase speculation.

In the oil market, Iraq tension held up prices. World benchmark Brent crude oil futures traded as high as $24.24 a barrel, up 37 cents on the day and only 15 cents off Wednesday's peak - the highest prompt price on London's International Petroleum Exchange since January 1991.