Credit concerns sidelined by markets

Wall Street opened sharply higher today as investors went bargain-hunting, whilst European stocks recovered from a shaky start to close with moderate gains.

London stocks moved from red to black today as solid corporate results plus the strong start on Wall Street helped the index to a close of 6,132, a 30-point gain.

Strong sales over the past three months particularly at its Premier Inn chain made leisure stock Whitbread the day's biggest gainer. However, the company also announced that it is to delay a cash return due to current conditions in the credit markets.

Miner Antofagasta was up 1.2% after announcing an expectation-beating 12% rise in first-half profit on soaring copper prices. And Barclays added 1.9% as concerns over its exposure to German bank Sachsen receded.

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Across Europe, most of the major indices recovered from a shaky start to notch up moderate gains, including the Paris CAC-40 which closed 45 points higher, at 5,520. Germany's benchmark DAX-30 index spent most of the day lower following data showing that consumer confidence had fallen for the first time in six months, but the bright start on Wall Street saw stocks back in the black late afternoon. And the DAX went on to close 8 points higher, at 7,439.

Following yesterday's plunge (for more on this, see today's MoneyMorning: What central banks and Pavlov's dogs have in common), Wall Street opened nearly 100 points higher as bargain hunters piled in. Strength in the technology sector also fuelled the advances. Apple was up over 4% on positive comment from Goldman Sachs and the likes of Intel and Hewlett Packard were also higher.

Credit concerns persist amongst commodities

However, although equity investors sidelined credit concerns in order to snap up bargains, commodities investors remained cautious. Lead registered its biggest fall in a fortnight, and copper, aluminium and nickel were also lower on fears that the credit crunch will negatively impact on demand for commodities.

Crude oil futures rose above $73 a barrel on data showing falling gasoline supplies and gold was hovering just above the $670-an-ounce mark, having risen for the first time in three days.

Tentative return to the carry trade

The recovery amongst stocks helped investors rediscover their appetite for risk and make tentative steps back into the carry trade. The pound had risen to as high as 2.0152 against the dollar and 230.65 against the yen, the latter a gain of nearly 1%.

As at 1800 in London