Heading into the final hour of trading, UK shares have backed away from earlier highs.
After very briefly moving out to fresh 18-month highs, the FTSE 100 has dropped back today on a muted opening for US markets. Earlier on, the FTSE surged out to its best levels since the end of August 2008 on the back of US Retail Sales figures for February. Unexpectedly, these rose, despite many analysts expecting a fall due to the inclement weather. The spurt for UK shares proved short lived and the FTSE slipped back to the start line by mid-afternoon.
Markets are at key points at the moment. In the UK we have seen solid gains for the past five weeks and are now back up to levels last seen just before the collapse of investment bank Lehman Brothers. Back then, the 5650 level proved to be something of a hurdle for the FTSE 100 and this is likely to be the focus for traders early next week, with a break through here expected to add more momentum to the upside. However, the FTSE 100 does look to have got a little out of step with its global peers in recent weeks thanks to strength in particular from mining stocks and banks. Both the Dow Jones and the German Dax have yet to crack the earlier high points hit in January this year, leaving some investors a little nervous that the London market is somewhat overheated and vulnerable to at least a small corection. It would not be surprising to see some more indecisive trading in the days ahead as London waits to see if other stock markets still have some fuel left in their tanks.
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