960415

German shares

close at record

highs

LONDON: British and German shares zoomed to record highs on Monday, boosted by a buoyant Wall Street and the strength of the dollar against the mark.

London stocks closed at 3,790.5 after rising 23.7 points or 0.63 percent with the the help of fresh bid speculation and favourable inflation news.

Germany's DAX index earlier closed floor trading at a record 2,545.95, having climbed 1.36 percent as currency sensitive stocks received a shot in the arm from the dollar's strength.

Wall Street opened firm for the second day, but the rise of the Dow Industrials was limited by weakness in bonds, with U.S. treasuries mostly lower as European markets closed. Hopes of a German rate cut this week kept the dollar bubbling against the mark after it set a 14-month high against the German currency.

The mark's losses against the dollar were mirrored across the board.

"People are really hoping for a cut in German rates this week and the dollar still looks like it can push higher against the mark in particular," said Tony Ives, trader at MeesPierson Derivatives in London.

Dealers were focusing their attention on the regular fortnightly Bundesbank council meeting on Thursday for clues to the direction of German rates.

"U.S. rates are likely to move higher and German rates are likely to head down," said Andrew Smith, an economist at Credit Lyonnais Laing. "This is helping the dollar move higher."

The mark was also battered by weekend comments from Bundesbank president Hans Tietmeyer who said he would welcome a "normalisation" of the mark because it would benefit German exports. German and British government bonds slipped back after a firm start, slipping in tandem with U.S. treasuries. The slide in German bonds helped undermine German equities in post bourse computer trade, with the IBIS DAX index ending at 2540.79.

Dealers said volumes were moderate, with investors cautious ahead of the central bank meeting on Thursday and Friday's expiry of share options and futures.-Reuter