London Calling: FTSE Racks Up Its Best Quarter In History

As September concluded, so too did the third quarter of 2009.

And what a quarter it was for London’s FTSE-100 (^FTSE) stock market. In fact, it was the Index’s best three-month period in its 25-year history.

As global stock markets scoffed at the traditional “sell in May and go away” adage and sizzled throughout the summer, the “Footsie” notched up a 21% gain.

The positive vibes weren’t just restricted to Britain either. Stocks across Europe enjoyed a strong summer, with the FTSEurofirst 300 Index of top European shares posting its best quarter in 10 years, with a gain of 16%.

The question is: How long can the markets - both in the U.S. and overseas - walk the tightrope between bull and bear? As any savvy investor knows, no market or stock ever goes up in a straight line without correcting, or at least pulling back a bit to relieve the overbought conditions.

Perhaps the onset of the fourth and final quarter of 2009 will bring about a change in investor sentiment. In fact, a Reuters survey showed that economists expect the global markets to stumble towards the end of the year.

So along with the usual end-of-year window-dressing, as investors adjust their portfolios for tax purposes, we could see volatility kick up a notch, as any investors who haven’t managed to recoup their early 2009 losses make a bid to do so before Big Ben chimes at midnight and the ball drops in Times Square.

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