London and New York - Britain’s top share index rose on Friday, erasing the previous session’s losses, as investors took positions ahead of the European leaders’ summit on Sunday, where it is hoped progress will be made towards a resolution to the European debt crisis.
Traders said much of the day’s gains -- albeit in volume just 76% of a slim 90-day average -- was down to short covering, with investors keen not to be caught out in the event of a change in sentiment among leaders at the weekend.
France and Germany have said a comprehensive solution to the crisis will be discussed on Sunday, but no decisions will be adopted before a second meeting to be held by Wednesday.
US stocks advanced on Friday, with the Dow up 2% by midday trade, as investors looked forward to a weekend European Union debt-crisis summit that could potentially remove a major headwind for markets.
The Dow Jones industrial average was up 215.06 points, or 1.86%, at 11 756.84. The Standard & Poor’s 500 Index was up 19.94 points, or 1.64%, at 1 235.33. The Nasdaq Composite Index was up 36.41 points, or 1.40%, at 2 635.03.
“Europe’s troubles have gone from Greek tragedy to French farce (referring to the lack of unity shown by France and Germany in finding a solution),” said Lothar Mentel, chief investment officer at Octopus Investments, which manages $3.9 billion.
“Let us sincerely hope that European politicians will change this impression soon. We urgently need them to stop dithering and start delivering.”
The FTSE 100 has continued to ebb and flow on the news seeping out of Europe, with twitchy traders taking profits at the mere sign of negative comment and buying back on dips.
London’s blue-chip index closed up 103.97 points, or 1.9%, at 5 488.65, but have been rangebound since early August as investors wait for the catalyst -- cohesive agreement among EU members to deal with the debt -- to hold above 5 450.