RECENT market exuberance may be ill-advised as the UK faces further pain before it can follow France and Germany out of recession, economists warned yesterday.<br /><br />The benchmark FTSE 100 index of Britain’s biggest companies touched a 10-month high of 4,755 points during last week’s trading. <br /><br />But these heights may not be underpinned by economic fundamentals.<br /><br />Neil Dwane, chief investment officer at Allianz Global Investors unit RCM, warned giant levels of lending coming out of China are stimulating the global economy but “huge quantities of this lending seem to have leaked into the equity and commodity markets”. <br /><br />He added: “If China gets into difficulty it could end up pulling the rug out from under markets.”<br /><br />He urged stock traders to watch the Shanghai Stock Exchange carefully – the market has already fallen by 12 per cent so far this month compared with five per cent rises on most other global markets, he added. <br /><br />Markit’s Gavan Nolan, an expert on credit default swap derivatives that are used by investors as insurance against losses on bond investments, said poor performance on the instruments last week reflects problems in the underlying economy.<br /><br />Jeremy Batstone-Carr, a strategist at Charles Stanley, said the fact the Bank of England boosted its quantitative easing programme by £50bn this month does not bode well. <br /><br />Although the Bank boosted its growth forecasts slightly, it “holds this view with very low levels of confidence”, Batstone-Carr added.<br /><br />David Buik, a strategist at BGC Partners, said the UK is far behind the curve set by France and Germany. <br /><br />He said: “In Germany and France the consumer is not borrowed up to the hilt as we are here in Old Blighty."