'January Barometer' predicts good year for markets

The tradition is called the 'January Barometer'. The theory is that if January stock market performance - particularly in the US - is good, then it sets the tone for the rest of the year and markets generally will close with gains.

The signs are good for this year as Wall Street began 2011 with a big lift, thanks to further indications that the economy is improving.

It was also helped by more than expected spending on construction, and manufacturing activity increased for the 17th month in a row.

Stocks in Europe also rose after news manufacturing in countries that use the Euro expanded faster than analysts had forecast.

Bob Parker, Senior Advisor at Credit Suisse, explained the optimism for 2011.