UK shares rally after falling below the crucial 5,000 level

David Hellier
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The UK’s top share index the FTSE 100 bounced off 13-month lows yesterday ahead of the US Fed’s announcement, which dealers hoped would calm nerves over global debt and growth problems.

The UK benchmark index rose 95.97 points, or 1.9 per cent, to 5,164.92, snapping a losing streak that has stretched back over the last seven trading sessions. At one point in the morning the index fell below 5,000 for the first time since September 2009.

The violent swings suggested investors remain wary against an uncertain economic backdrop.

“It is important not to get too excited by the gains on the FTSE however,” warned Joshua Raymond of City Index.

“In the last two weeks the UK index has lost a massive 20 per cent to these lows. There has been no swift change in market sentiment from negative to positive,” he said.

The volatility was echoed in the US markets, which swung back and forth several times during Fed chairman Ben Bernanke’s speech.

The CBOE Volatility Index, also known as the VIX, fell 14 per cent yesterday, but it was still up more than 60 per cent so far this month.