SHARE markets have risen strongly on both sides of the Atlantic after US economic data smoothed fears about inflation and rising interest rates. The Dublin market was among those reaching a new high, with the ISEQ index closing up more than 0.5 per cent at 2833.97.
US treasury bonds rose immediately after the release of subdued consumer price index (CPI) and retail sales figures for December and Wall Street followed suit.
Records tumbled across Europe as investors responded by pushing stock markets up in the belief that the American figures lowered the pressure on the US Federal Reserve to raise rates. Last night the Dow Jones industrial index closed up 53.11 at 6762.29.
The dollar rose to its highest p9int against the deutschmark since July 1994, hitting 1.5973 deutschmarks. Sterling rose along with the dollar in late trading, despite declining expectations of an imminent rise in interest rates. The pound eased to 98.38p sterling from 98.42p the previous day. The Irish currency rose further against the deutschmark, ending at DM2.6176, up 0.75 pfennigs.
At least 10 European stock markets recorded record highs during the day, with most of them closing at a peak. The ISEQ index was among those pushed to a new high.
European markets opened cautiously ahead of the US figures. In the event, core US CPI figures for December were subdued and Christmas shopping boosted retail sales slightly more than expected. Economists saw the figures as indicating that consumers had held spending in check, which should help to curb inflation and reduce the pressure on interest rates.
The US Labour Department reported the Consumer Price Index rose 0.3 per cent in December, in line with analysts' expectations.
More important, said analysts was a surprisingly small increase when volatile food and energy prices were excluded. The so-called "core" CPI rose only 0.1 per cent, a smaller gain than economists had forecast.
Comments by US Federal Reserve chairman Mr Alan Greenspan in Belgium earlier appeared to have little impact on markets.
Mr Greenspan, who caused turmoil late last year by warning about irrational exuberance in financial markets, urged central banks not to take risks with inflation.
London shares posted strong gains for the second day in a row, fears of an imminent rise in interest rates subsided on both sides of the Atlantic.
Led by surging bank and supermarket stocks, the FTSE 100 finished 60.9 points higher at a record 4,168.2. The rally has added £18.8 billion sterling to blue-chip stocks over the last two sessions.
The FTSE surpassed its previous intra-day peak of 4,123.2 set on New Year's Eve in its biggest one-day gain since November 22nd.
The gains were mainly due to growing hopes that interest rates would be left alone after Wednesday's monetary policy meeting between the Chancellor of the Exchequer Mr Kenneth Clarke and the Bank of England governor Mr Eddie George.
Mr Clarke and Mr George are to meet today and, up to recently, there had been expectations of a rise in British interest rates. However recent British economic data have lessened expectations of an imminent rate rise.
German shares, which were early laggards as investors held back, staged an afternoon surge with the IBIS DAX hitting a record 2,984.32 points in post-bourse electronic trading.
Although the IBIS DAX closed off its highs at 2,978, one German trader commented: "Unless there are any upsets from the US, I think we can reach the 3,000 points this week now."
