Bouncing back! Record day for UK shares

London's leading share index posted its biggest one-day gain today after the US Government vowed to spend "hundreds of billions" of dollars to mop up the toxic debts behind the global financial crisis.

At the end of a tumultuous week for financial markets, the FTSE rocketed 431.3 points to 5311.3 - a rise of 8.8 per cent.

It is the blue chip index's biggest one day rise since being established in 1984, adding £103 billion to the value of Britain's biggest companies.

Financial stocks were the top performing shares, led by Natwest owner Royal Bank of Scotland which posted a 32 per cent rise, Barclays up 29 per cent and Lloyds TSB up 20 per cent.

Today's dramatic surge came after news of a huge US rescue plan to relieve banks of their unwanted mortgage-backed assets which have paralysed world financial markets, and temporary bans on the short-selling of financial shares on both sides of the Atlantic.

It also caps one of the most eventful weeks in financial history, which has included a run on Halifax Bank of Scotland shares that prompted a £12 billion rescue by Lloyds TSB, the 85 billion US dollar (£47.2bn) bail-out of the US's biggest insurance firm, AIG, and the collapse of the venerated US investment bank Lehman Brothers.

In a decision that could have far-reaching consequences for the world economy, Treasury Secretary Hank Paulson said the US Government would act to remove the mortgage assets clogging up banks' balance sheets and "choked" off vital credit flow over the past year.

"The Federal Government must implement a programme to remove these illiquid assets that are weighing down our financial institutions and threatening our economy," he said. Asked how big the package would be, Mr Paulson said: "Hundreds of billions of dollars."

Other European stock markets were also in better shape today, with Paris's CAC 40 9 per cent ahead, and Frankfurt's Dax 6 per cent up.

New York's main Dow Jones was also continuing yesterday's near 4 per cent rally, rising more than 3 per cent today.

Anthony Grech, market strategist at IG Index, said: "Today has been the most incredible day of a fascinating financial week."

Today's was such a busy session that it delayed the normal market close by several minutes.

Nearly 3.92 billion Footsie company shares were traded, compared to last Friday's 1.3 billion figure, CMC Markets said.

Today's huge rise also almost takes the FTSE 100 Index back to where it started the week, which was at 5416.