LONDON, Dec 5: Britain’s leading share index surged over two per cent on Wednesday in brisk trade as Wall Street raced higher in a tech-led rally confident of an economic recovery next year, dealers said.

But many market watchers sounded a note of caution, saying the FTSE had got ahead of itself and was unlikely to have any staying power. The benchmark index closed 121 points or 2.3 per cent firmer at 5,333.5 its best finish since November 19 with market volume of 2.8 billion.

Banks provided the backbone of gains with 36 points, with telecoms and oil a further 42 points combined.

Investors flocked to technology shares. Tech players Sage, Logica and ARM Holdings all hogged the blue-chip winners board, rising by over 10 per cent each. The FTSE techMARK leapt 6.1 per cent to 1,594 points.

“The cause of this latest spike may prove to be a squeeze as the hedge funds have been caught on the wrong foot by the better-than-expected NAPM data,” said Jeremy Batstone, head of research at NatWest Stockbrokers.

Chartists said there was strong resistance between 5,300 and 5,400 on the FTSE 100 and the market may re-test September’s multi-year lows in 2002. The market has recovered 25 per cent since the dive, rising to a peak of 5,382.2 points on November 19.

UK shares were fired up by the Dow Jones index springing above 10,000 points and the Nasdaq above the psychological 2,000-point level for the first time in months.

“Another bubble is being created... and with every bubble stock market investors need to enjoy the ride but stand close to the exit door,” said Batstone.

NAPM’s non-manufacturing index, a key gauge of service sector activity, on Wednesday showed an unexpected return to growth in November ater a very weak showing in October.

NYSE PROFITS FALL: The New York Stock Exchange, the world’s No. 1 equities market, on Wednesday reported quarterly earnings that fell 33 per cent as the Big Board took a charge from cutting 150 jobs.—Reuters