US stocks surge as industry is seen recovering

Stocks soared in late trading in New York last night as investors digested fresh economic data that suggested that the economic slowdown in the United States may be ending.

Stocks soared in late trading in New York last night as investors digested fresh economic data that suggested that the economic slowdown in the United States may be ending.

The Dow Jones industrial average reached a six-month high after surging 262.73 points, or 2 per cent, to close at 10,368.86. That is its highest close for six months. For the week the blue-chip index was up 4.02 per cent.

Edward Hemmelgarn, chief investment officer of Shaker Investments, said: "For several months now, the economic data has been stronger than the market. People are taking the better economic numbers and, for the first time, believing that that may translate into better corporate numbers."

Driving the enthusiasm was news that manufacturing in the US is expanding again for the first time since July 2000. A key US survey, published by the Institute of Supply Management, said its index of manufacturing activity had shot up to 54.7 in February, higher than Wall Street expected. Anything above 50 indicates expansion.

"This tells us a recovery process of some magnitude is under way. Just as the US slowed first, it is recovering first," said Neal Soss, chief economist at Credit Suisse First Boston.

Stocks also performed well on the Nasdaq exchange, burying a four-week losing streak. Yesterday, the Nasdaq gained 71.26 points, or 4.12 per cent, to close at 1,802.75.

Meanwhile, the gap in Britain's two-speed economy may be starting to narrow, after manufacturing output galloped ahead last month as consumer borrowing eased slightly.

The keenly watched purchasing managers index rose to 50.1 in January, up from 46.5 in December and taking the measure to its highest level in 12 months, according to the Chartered Institute of Purchasing and Supply. A figure above 50 indicates a greater degree of activity among managers.

There was a sharp rise in recorded manufacturing output, from 48.0 to 53.5, its highest level since March 2000. Domestic and export order books also edged above the 50 mark, although employment levels and prices remained weak.