Shares stage powerful recovery

SHARES in London, having been knocked back initially by another sharp fall in the Japanese stock market and a big slide on Wall…

SHARES in London, having been knocked back initially by another sharp fall in the Japanese stock market and a big slide on Wall Street on Wednesday, staged a powerful recovery during the last hour of the session, as the US market recorded an all time intra day high in early trading.

The rally on Wall Street came in the wake of widespread relief at US economic news, which showed producer prices had risen by 0.5 per cent during December, in line with the consensus.

Earlier, a revival of worries about a potential wave of Japanese selling of overseas investments brought another bout of uncertainty to London.

Additionally, there were fears that the US PPI rise could have been much higher, triggering fears of growing inflationary pressures and a rise in US interest rates.

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Increasing the pressure on British stocks, and especially the big exporters, was further strength in sterling, which rose to its highest level since September 1992 against the deutschmark.

That wrought further damage in the drugs and chemicals sectors.

The impact of sterling's performance in recent months was most felt in a profits downgrade on British Steel carried out by Merrill Lynch, the US broker.

Today brings the Confederation of British Industry's distributive trades survey for December which will include evidence of Christmas retail sales.

Turnover at 6 p.m. was 758.8 million shares; retail business on Wednesday was worth, £1.19 billion.