Shares ease after wild week: No setback in sight as foreign buyers help to propel advance
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Your support makes all the difference.LONDON shares eased yesterday after a remarkable week that saw the FT-SE 100 index end 2 per cent higher, taking the rise in the latest month to 9 per cent.
The FT-SE 100 index finished at 3,057.6, down 7.9 points on the day, in turnover that remained high for August. Earlier in the day, the index came close to its latest peak of 3,089.2, when it touched 3,077.7.
A lower opening on Wall Street and the fact that this was the first week of the long three-week holiday account contributed to yesterday's gentle slide.
This week alone, some 3.6 billion shares changed hands and the index ended 47.5 points higher. There was little indication of any setback looming. Foreign buyers helped propel the advance with money pouring in from the US, Japan and Europe.
Many UK institutions were already committed to the market because of the plethora of rights issues and flotations during the past three months. Domestic activity may have been dominated by institutions switching out of one stock and into another; analysts doubted that much new money was committed.
Richard Kersley, equity analyst with Barclays de Zoete Wedd, thought the market might now pause for breath but was unlikely to slip much further. Later on, however, buying would resume, partly because price/earnings ratios were significantly lower than in Germany and France. 'Equities are still cheap. Relative to Europe the UK looks like a good buy,' he said.
But Mr Kersley thought a further surge unlikely. 'We are getting close to most people's end-year valuations.'
Nick Knight, of Nomura Securities, was more bullish. 'This is probably the last great opportunity to make money safely. There is no particular point of resistance, there is nothing to be frightened of.' Mr Knight has an end-September target of 3,200 for the FT-SE 100. By the end of the year, he expects the index to reach 3,500.
The recent sharp surge in the yen has resulted in a bearish tone to the Japanese stock market and Mr Knight expects more Japanese money to flow into the UK market.
(Graph omitted)
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