London's FTSE 100 blue-chip index ended Wednesday trading on a high note as drugs, telecoms and banking stocks turned in a solid pre-Easter performance to cement their recovery from Monday's six-month lows. The techMARK 100 "new-economy" index also posted strong gains, though experts said it is still too early to say the market has halted its slide.
Trading was relatively quiet, with investors wary of taking a firm position as London markets gear down for the Easter weekend. The NYSE and Nasdaq exchanges will be open Monday, unlike their UK counterparts. "In this environment, nobody wants to have any exposure when London is closed and everything else open. If anything goes wrong, you could get hit really hard," one dealer said.
Closing near a session peak of 6,193.6 scaled in the final half hour and distancing itself yet further from Monday's six-month low at 5,915.2, the UK equity benchmark ended up 110.9 points or 1.8 percent at 6,184.9.
Trading volume was average at 1.75 billion shares traded by the official 1530 GMT close, while advancing issues enjoyed a more than two-to-one majority.
The techMARK 100 index enjoyed a positive session to post final gains of 2.6 percent. The fledgling technology benchmark has bounced back tentatively in the last two sessions from its huge correction in March and April, but technology analysts at Nomura International warned hopes of a concerted rally looked premature.
Charting the progress of UK technology stocks since the start of January 1998, Nomura said "the UK's technology index could fall another 40 percent before it reaches its trend line."
In New York, the Dow Jones Industrial average was 20 points lower by 1530 GMT, although it had recovered from a 90 point decline in the opening minutes. The Nasdaq showed similar tenacity, shrugging off early profit-taking in technology bellwethers Intel and IBM to be up 0.3 percent at the London close.
Technology stocks were the main gainers on pan-European indices, with the Stoxx 50 technology index rising 3.6 percent and the media index 2.4 percent. Dutch firm Philips Electronics NV led with an 8.6 percent rise after it posted better-than-expected earnings in the first quarter.
Analysts said there are no indications the market has finished declining. "Volatility is going to remain with us for a while and stocks will retest lows," said Nathalie Monnoyeur, a European equity strategist at Credit Lyonnais Securities in Paris. She said telecommunications stocks in particular were still overvalued.
Traders in France and Germany had also expressed concern that the recovery in the United States was a technical one and may only be temporary. One German dealer noted that European institutional investors, who have more at stake than day traders, were holding back from the market.
Vodafone AirTouch (quote: VOD)closed up 4.11 percent at 316.8. British Telecom (quote: BT)was down 3 percent to 1,096p on worries it is paying too much in the ongoing next-generation mobile phone license auction. Thus (quote: THUS) was down 2 percent at 361.5p.
Publisher Emap rose a further 3 percent to 1,138p on rumours Yahoo! may buy the company. QXL.com (quote: QXL) soared 9.29 percent to 247p, while Freeserve (quote: FRE) sank 4.5 to 361.5p. lastminute.com dropped slightly to 157.5p.
Reuters contributed to this report
For full coverage of the markets' recent slide, see the Market Mayhem news roundup.
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