Investors are ending the year in more confident mood than at any time since the bursting of the equity market bubble. State Street Associates' investor confidence index climbed to 114.8 in December, boasting its largest single monthly rise in 2003 and hitting its highest point since the end of 1999.

Ken Froot, a professor at Harvard University who developed the confidence index with Paul O'Connell of State Street Associates, said: "Institutional investors remain very focused on positive economic signals, and have this last month become even more convinced we are returning to robust growth with low inflation."