FTSE scrubs out 2009 retreat

The FTSE 100 has now almost retraced its 2009 losses, with the general rally in global equity markets appearing to gather steam.

At the very beginning of the year, the index stood at 4438 - but then dropped to a low of just over 3512 in early March due to a barrage of negative economic data.

However, reports of ’green shoots’ of recovery from the credit crunch appear to have buoyed investor sentiment - and the index has poked above 4438 over the past three days.

The Bank of England’s announcement that it would be expanding its quantitative easing programme by £50 billion likewise did not lead to sustained selling in London on Thursday.

At the close yesterday, the FTSE stood at 4398.68 points, 2.19 points up on the day.

Shares gained again in London this morning, hitting a mid-morning high of 4,470 following positive news over the ’stress tests’ of US banks.

Earlier, Mr Geithner had said in an interview with talk show host Charlie Rose that ’none’ of the 19 US banks - who were tested by officials for their future financial strength if market conditions worsen - were technically insolvent.

’We brought the nation’s financial supervisors together, and in an unprecedented step, asked them to do a careful look under the hood, to take a careful look at how much - how strong these institutions were in the event things got worse,’ he explained.

The stress test results themselves later showed that ten of the 19 firms had ’failed’ the scenarios - meaning not that they were likely to go under, but that they would need to raise fresh capital in order to protect their balance sheets.

Talking to the Daily Telegraph, Mike Lenhoff at Brewin Dolphin said: ’[The rally] has a distinctly different feel from other rebounds.

’There are stronger reasons for this rebound to be real … These include improvement across all financial markets - with yields narrowing on bonds - as well as a reduction in the number of companies revising their earnings downward.’ADNFCR-2318-ID-19159945-ADNFCR