Private investors lead stockmarket recovery

Private investors are flooding back into the stock market amid signs that the economic recovery is picking up steam.

Stockbrokers are reporting a "spectacular" increase in online trading, according to market research company Com-Peer. They show a 42 per cent increase in trades in the second quarter, while the number of clients rose to 395,000.

Mark Powell, chairman of the Association of Private Client Investment Managers and Stockbrokers, said the boom reflected a growing optimism. "The online resurgenceis spectacular, but all business types are growing too," he said in an interview with the Financial Times.

There were more than 700,000 online trades in the second quarter, up from 500,000, the level at which they had been stuck for the past year.

However, recent Stock Exchange figures have shown that while the volume of trades has increased substantially since the beginning of the year, the average value is still well down on that of a few years ago, suggesting that City institutions continue to sit on their hands.

But there are other signs that the economic recovery is picking up pace. A report today from the Royal Bank of Scotland shows London's economy expanded in July at its strongest pace for 10 months.

Stuart Porteous, senior economist at RBS, said: "Businesses are getting more confident about the economic recovery and are happier to make longer-term investment commitments."