Global markets surge after forecast-busting US manufacturing data

After a miserable performance in August, global stock markets made an upbeat start to September as better than expected US manufacturing data lifted spirits, adding to the positive news out of China and Australia this morning.

The US Dow climbed 2.3% to 10,248 in the first hour of trade after a surprise rise in the Institute for Supply Management (ISM) index of US manufacturing, which rose to 56.3 in August from 55.5 in July. Economists had been expecting a fall to 52.9.

In Europe, the FTSE 100 added 2.4% to 5,354, France’s main index jumped 3.7% to 3,621 and Germany’s Dax added 2.2% to 6,055.

Markets had been gaining ground earlier after better than expected Chinese manufacturing data and as the Australian economy grew at the fastest pace for three years in the second quarter.

That overshadowed disappointing manufacturing data for the UK this morning.

In company news, Cable & Wireless Worldwide shares added 5.5p to 72.3p after reports US telecoms giant AT&T is considering an 110p per share bid for the group.

Jerry Dellis, analyst at Jefferies, said ‘With CWW still trading more than 20% below pre profit warning levels, it is reasonable to believe that multinational telecoms companies keen to build share in UK enterprise could be taking a closer look’

He said the market is currently pricing in an unjustifiably cautious outlook for the group, adding to its attractiveness.

Shares in TUI Travel added 15.3p to 216.6p after a report in FT Deutschland said German parent TUI may be ready to buy up the shares it does not already own.

Miners were boosted by the flurry of upbeat economic data with Kazakhmys leading the pack higher, up 67p at £12.23.

Just two stocks were trading below the tidemark with traditionally defensive National Grid down 2p at 547p.