Euro Shares At New Highs, Dollar Steady

The dollar was steady, off overnight levels but still keeping well within its recent ranges.

Dealers attributed the European gains to Fridays 60-point rise on Wall Street which carried it to a new closing high of 5,992.86 following weaker than expected US jobs data.

Investors worldwide celebrated the data, believing it would deter the US Federal Reserve from a long-feared tightening of monetary policy. London and Frankfurt also closed at record highs on Friday.

In London, Europes largest bourse, shares were slightly higher in late-morning trade, but some way off the new highs set earlier in the day on the back of Wall Streets record run. The market was sustained by heavy interest in selected stocks.

 

The FTSE 100 share index stood at 4,033.7 by 1100 GMT, up 8.9 points on the day, after touching a new record high of 4046.8 points in earlier trade.

The market was squeezed tightly on Wall Street, one marketmaker said.

But others were more cautious, saying investors were becoming increasingly nervous of the markets heady altitude.

Some also said the FTSE indexs strength also masked what they called a patchy rally, characterised by stockpicking.

Im concerned by the relative narrowness of this rally...Unless it broadens out we would have to question the FTSEs ability to hold all its gains, one dealer said.

British Airways was one of the shares in favour, touching a new high of 617p before settling back to trade 11p higher at 605-1/2p. The stock gained heavily on Friday on hopes airlines will in future be able to trade take-off and landing slots more openly.

Investors also homed in on oil stocks after a report in the Wall Street Journal that Shell Oil and Texaco were in talks to merge their US refining and marketing businesses.

Shell shares were up 14-1/2p at 1,013-1/2p while British Petroleum was up 11p at 698-1/2.

Dealers said the market showed little reaction to a surprise drop in British industrial output in August.

German shares were also higher at midday with the DAX index breaking through to a new high just above 2700 points, a gain of around 0.64 per cent, after the DAX Ibis closed above 2700 on Friday in post-exchange trading.

French shares were showing small gains at midday after spending most of the morning in negative territory as the bourse continued its consolidation.