Shares in new boom

HARD-HIT pension holders finally had something to celebrate last night after shares rocketed past the 5,000 mark to close at their highest level for almost a year.

Share rises could lead to the long sought after end to the recession Share rises could lead to the long sought after end to the recession

After months of financial misery in which hundreds of millions of pounds were wiped off the value of retirement funds, the markets have at last begun to show signs of recovery.

Billions of pounds is invested each year on the market by fund managers hoping to maximise their clients’ income in retirement.

But when the crunch struck last autumn, sending the global economy into freefall, many hard-working families saw investments tumble overnight.

Thousands coming up to retirement age were forced to postpone their plans and carry on working.

But steady rises in the stock market since March have led to growing confidence among investors.

Last night the FTSE 100 Index of leading shares closed at 5,004, the first time it has breached the psychologically-significant 5,000 barrier since last September.

In the US, the Dow Jones industrial average closed at 9547.22 up 49.88.

Just five months ago the FTSE plunged to 3460 sending shockwaves among investors and threatening the future of many of the country’s leading businesses.

But a combination of surging consumer confidence and buoyant economic indicators has helped turn the situation around, helping the markets climb by more than 1,500 points in just six months.

Last night analysts were confident the gains would continue, helping those with battered pension funds to better plan for their futures.

David Jones, chief market strategist at IG Index, said: “Based on current momentum it seems very strong and there seems to be, in the short term at least, no stopping the market.

“Five thousand is just a bit of a psychological level anyway – what people will be looking for is it reaching more like 5,400, which was last seen in September 2008.”

And Simon Denham, managing director of Capital Spreads, said: “Difficult as it is to buy up here, the bulls will be taking confidence from the lack – just yet – of a reaction pull back.

“The big hope is that all this spending does not just build a short-term bubble.”

Today the Bank of England is expected to keep interest rates on hold, but analysts will be looking for any updates on its quantitative easing programme.

The news coincides with mounting evidence that the recession is over and better times are just around the corner.

A survey by the Nationwide building society found consumer confidence was at its highest level for 12 months.

The markets have been boosted by news that US food company Kraft has launched a £10billion takeover bid for Cadbury’s chocolate and that the mobile phone groups Orange and T-Mobile are planning to merge.

Figures from the National Institute of Economic and Social Research suggest the economy had seen growth of 0.2 per cent in the three months to August.

Data released on the state of the jobs market suggest that employment prospects are im­- proving for the first time in 18 months, while manufacturing figures point to the strongest growth in more than three years during July.

But Chancellor Alistair Darling warned: “We still have to be cautious...to make sure we get recovery firmly entrenched and then make sure we can plan for the future.”

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