London shares leap to biggest one-day rise

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The Independent Online

Britain's top share index posted its biggest one-day per centage rise today, surging 9.8 per cent, led by rallies in commodities and banks, and helped by a tax give-away UK Pre-Budget Report. The FTSE 100 index ended 372 points higher at 4,152.96, the day's peak, having bounced from a low of 3,780.96.

"At current levels, global markets have rallied between 5 and 10 per cent since the lows on Thursday," said David Evans, market analyst at BetOnMarkets.com.

"Although welcome, traders are not holding their breath that this marks the start of a rally from the recent lows," he said.

"A 5 per cent move could be erased within the space of a few hours if markets continue their record volatility streak."

Banks were among the standout FTSE gainers in London, with Royal Bank of Scotland up 7.2 per cent and HSBC ahead 3.8 per cent, after the U.S. government agreed to inject $20 billion into Citigroup to avoid a collapse that could have wrought financial havoc around the globe.

Citigroup shares leapt nearly 60 per cent higher on the news, erasing last week's plunge, with U.S. blue chips jumping 3.5 per cent higher in response, extending Friday's leap.

"Had Citigroup gone under, that would have knocked Lehmans into a cocked hat," said Jeremy Batstone-Carr, head of private client research at Charles Stanley. In the UK, Barclays rose 10 per cent as its investors voted in favour of the bank's controversial 7 billion pounds fundraising, its chairman Marcus Agius said at a meeting called to vote on the plan.

Lloyds TSB gained 18.4 per cent and HBOS rose 17.3 per cent. Lloyds has started to look for potential buyers for HBOS's equity stakes in a range of British businesses from coffee shops to gyms, the Daily Telegraph reported.

Standard Chartered missed out on the sector rally, shedding 4.5 per cent after it announced a 1.8 billion pounds ($2.69 billion) rights issue it said would strengthen its balance sheet and give it the flexibility to take advantage of opportunities in the turbulent markets.

Among other financial issues, insurers also recovered after recent hefty falls as equity valuations rose, with Prudential up 20.4 per cent, Aviva ahead 9.1 per cent, and Legal & General up 9.5 per cent.

Miners forged higher, with Kazakhmys, ENRC, Xstrata, and BHP Billiton adding between 22.9 per cent and 27.8 per cent, reflecting a recovery by commodity prices.

Energy shares also rebounded, with BP, Royal Dutch Shell, and BG Group up between 7.4 per cent and 11 per cent as crude rallied 8.5 per cent to more than $54 a barrel.

Retailers got a boost from confirmation in the pre-budget report of a temporary cut in Value Added Tax to 15 per cent, with Marks & Spencer, Kingfisher, and Next up between 6.8-9.9 per cent, while supermarket chains Tesco and J.Sainsbury added 4.9 per cent and 7.8 per cent respectively.

Airline issues also got a pre-budget report lift from planned air passenger duty changes, with British Airways up 8.1 per cent and easyJet ahead 3.9 per cent.

"We have entered the Alistair in Wonderland arena of public finances," said Felix Riley, Head of Binaries at ChoiceOdds.

"We are in unchartered waters with about as much security as an oil tanker off the Horn of Africa."

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