The traditional pre-Christmas share rally has begun, as investors around the world ignore President Clinton's impeachment.

London and European bourses are expected to continue to advance on Tuesday after another lift in New York overnight.

Tokyo gloom

The optimism has not spread to Tokyo which has fallen sharply over night on the back of recent falls.

But this is largely due to local factors as concerns mount over the future of banking stocks, still mired in bad debts, and the intransigence of overall economic recession.

The leading Nikkei index slumped 3%, or 382 points, overnight, below the 14,000 level for the first time in some months.

Distorted picture

This picture of healthy markets at the end of 1998, though, is distorted by low turnover. When trading volume is low, relatively small orders can create the false impression of big demand for shares, resulting in high prices.

At this time of the year, market activity is usually low as investors and brokers get ready for the Christmas holidays. In Europe, traders are also preoccupied with getting ready for the launch of Europe's new single currency on 1 January 1999.

Wall Street rally

Nevertheless, shares in New York rallied for most of Monday trailing off towards the end of trade with the Dow Jones index closing at 8,988 - up 1% or 85 points on the day.

Once again technology shares - and especially Internet stocks - were leading the rally. The Nasdaq index, where many high technology companies are listed, was up nearly 52 points or 2.5% and closed at 2,130.

Boost for Europe

Wall Street's strong performance further fuelled Europe's gains.

On Monday, the FTSE 100 Index of leading shares surged ahead throughout the day to close at 5875 - up 134.6 points on the day.

It was a similar picture in Frankfurt where the Xetra Dax rose nearly 3.5% or 151 points to 4,780 and in Paris where the Cac 40 index was up more than 3% or 111 points at 3,803.