Now FTSE 100 sees near-record gain

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The Independent Online

London's FTSE 100 Index roared back from last week's crash today as bank rescue plans in the UK and across Europe found favour with investors.

The rebound saw the Footsie surge 8.3 per cent - its second biggest daily percentage rise ever - adding almost £78 billion to the value of the blue-chip index.

The much-needed 324.8 point gain followed a week of turmoil in which the Footsie lost more than 21 per cent - or £250 billion - in the worst week since the 1987 crash. The Footsie closed at 4256.9.

Indices across Europe also recovered some lost ground today after nations agreed a raft of emergency measures designed to ease the credit crunch.

And in the US the benchmark Dow Jones Industrial Average gained more than 6 per cent as President George Bush said the Government would help banks gain access to capital and unfreeze money markets.

Central banks including the Bank of England, US Federal Reserve and the European Central Bank today said they were ready to pump unlimited amounts into money markets.

The dramatic move came alongside the Treasury's plans to inject up to £37 billion into Royal Bank of Scotland, Halifax Bank of Scotland and Lloyds TSB.

Shares in the trio were hit as investors worried about the dilutive impact of a major Government shareholding in the bank and the prospect of vanishing dividends.

HBOS tumbled 28 per cent, Lloyds fell 14 per cent and RBS 8 per cent, although Barclays - attempting to shore up its finances without Government help - added 4 per cent.

Asian-facing bank Standard Chartered, which has no need to raise new capital, soared 20 per cent.

Companies elsewhere - particularly heavyweight oil and mining stocks - powered the Footsie advance amid hopes the action to salvage banks would help the global economy overcome the worst ravages of a sharp slowdown.

BP gained more than 11 per cent as oil prices rebounded from Friday's year-low. Mining stocks also jumped ahead with double-digit gains, led by Kazakhmys, which added 22 per cent.

In Europe, France's CAC 40 and Germany's DAX both posted gains of more than 11 per cent.

Countries which use the euro currency agreed yesterday to temporarily guarantee bank refinancing and pledged to prevent banks from failing.

And the German government on Monday put together a rescue package worth as much as 500 billion euro (£389 billion) to shore up the country's financial system - part of the co-ordinated European bail-out. Similar moves were unveiled in France, Italy and Spain.

Mike Lenhoff, chief strategist and head of research at Brewin Dolphin, said the co-ordinated global actions to ease the financial crisis were "placating" markets.

But he added the reaction in interbank lending markets were crucial in keeping the rebound going and money market rates today showed little sign of responding yet.

The overnight lending rate between banks fell from 5.81 per cent to 5.6 per cent, but still stands more than 1 per cent above the Bank's official 4.5 per cent rate.

The three-month interbank rate - key for pricing mortgages - fell back only marginally from 6.29 per cent to 6.27 per cent as banks remain fearful of lending to each other at longer terms.