Dow Jones moves back above 10,900

European bourses extended three-and-a-half-year highs as the latest employment data from the US came in very close to expectations and relief that the European Central Bank's first interest rate rise in five years was not the beginning of deep monetary tightening. The FTSE Eurofirst 300 gained 0.4 per cent to 1,261.72 with the Xetra Dax up 0.5 per cent to 5.290.47, the CAC-40 in Paris 0.3 per cent ahead at 4,649.64 and the FTSE 100 0.5 per cent higher at 5,512.0.

Wall Street muscled its way back into the positive territory on Thursday with a strong rally after investors took heart from tamer inflation data. All the main indices gained more than one per cent, with the Dow Jones Industrial Average moving back above 10,900. The key to the improved sentiment, following sell-offs earlier this week, was a report from the Commerce Department showing only a modest increase in core price inflation and personal income and spending in October. The data revived hopes that the Fed would not have to raise interest rates too high to contain price rises. Japanese stocks rose sharply again yesterday, boosted by a strong performance across the board. The Nikkei jumped 1.9 per cent to a fresh five-year closing high of 15,421.60. The Topix rose 1.5 per cent to 1,583.72, its performance deflated slightly by relatively muted growth among the banks. Almost every industry sector rose within the Tokyo Stock Exchange, with both domestic and export-oriented stocks going up. Particularly strong performances included a 3.2 per cent rise for the iron and steel sector, and a 2.6 per cent increase for real estate.