Markets Shrug Off European Deadlock

Equity markets shook off a sluggish start to record solid gains by the close of the day.

Morningstar.co.uk Editors 26 September, 2011 | 5:45PM
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The immediate catalyst for the gains appeared to be hopes for a resolution to the Eurozone crisis from the annual IMF meeting, though nothing definite has emerged. Nevertheless, it was the European markets that benefited most from the improved investor mood with the CAC 40 and Dax rising 1.75% and 2.87% respectively, albeit from a position of weakness.

In the UK, the FTSE 100 was up 0.45% to 5,089. It was led by the banking sector, which rebounded on the back of a positive analyst note from UBS. It said that, for the time being at least, the British and Nordic banks were seeing improved funding flows and would be 'bystanders' in all but the most extreme Eurozone-led banking crisis. Barclays led the banks higher, rising 6.85% to 156p. A number of the insurers were also beneficiaries with Legal & General and Aviva rising 6.39% to 97.45p and 6.38% to 295p respectively.

A number of the retailers posted strong gains, showing the market was not totally averse to higher risk areas. Unloved Dixons rose 4.64% to 11.49p, while Debenhams rose 2.41% to 57.3p, suggesting that investors may believe the sell-off has gone on long enough. Debenhams continues to benefit from the stronger outlook issued last week.

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